Indian Economy MCQs
Indian Economy Multiple Choice Questions (MCQs) for SSC, State and all One Day Examinations of India. Objective Questions on Indian Economy for competitive examinations.
1. Shankar-6 or Sankar-6 is a variety of which of the following commodities?
[A] Mustard
[B] Cotton
[C] Groundnut
[D] Soyabean
Show Answer
Correct Answer: B [ Cotton ]
Notes:It is a much traded Cotton variety. Some other varieties are:
- Suvin – Known for its long staple length and premium quality, it is a hybrid of Egyptian and Indian cotton.
- DCH-32 – A hybrid cotton known for its extra-long staple.
- Bunny – A high-yielding variety of cotton.
- Jaydhar – An indigenous variety grown mainly in Maharashtra.
- LH-1556 – A hybrid variety, often grown in Northern India.
- Varalaxmi – A hybrid variety popular in South India.
- Shankar-4 – Similar to Shankar-6, this variety is also known for its medium staple cotton.
- Mech-184 – A genetically modified (Bt) cotton variety.
2. If India’s external commercial borrowings increase, what is the likely macroeconomic impact?
[A] External debt will increase, but macroeconomic impact depends on hedging and exchange rates
[B] External debt will increase, but forex reserves will remain unaffected
[C] External debt will remain unaffected due to RBI’s forward book management
[D] External debt will increase proportionally, with no impact on current account deficit
Show Answer
Correct Answer: A [External debt will increase, but macroeconomic impact depends on hedging and exchange rates]
Notes:
At end-March 2025, India’s outstanding commercial borrowings reached $291.6 billion, a 16.4% rise from the previous year. Increase in ECBs directly raises external debt. Macroeconomic stability varies with hedging costs and exchange rate fluctuations, which can affect inflation and liquidity. The impact is also influenced by RBI’s management of foreign exchange reserves and currency volatility, not only the debt quantum.
3. Which among the following is a most suitable example of double counting in national income ?
[A] Wages of bus and train drivers
[B] Cotton output and cotton cloth output
[C] Electricity output and water output
[D] Tax receipts and earnings of inland revenue officials
Show Answer
Correct Answer: B [Cotton output and cotton cloth output]
Notes:
While estimating the national income, the problem of double counting occurs when the value of some goods and services are counted more than once. Cotton output and cotton cloth output both the raw material and the final result are counted.
4. What happens to deposit rates if RBI tightens monetary policy?
[A] Deposit rates will decrease
[B] Deposit rates will remain unchanged
[C] Deposit rates will increase
[D] Rates may increase or decrease
Show Answer
Correct Answer: C [Deposit rates will increase]
Notes:
When the RBI tightens its policy by raising the repo rate, banks face higher borrowing costs from the RBI. Banks increase deposit rates to attract funds from the public. For example, the repo rate was increased multiple times in 2022 and banks responded by increasing fixed deposit rates between May and December 2022.
5. If a commodity has more number of substitutes, the demand for this commodity will be _______?
[A] more elastic
[B] less elastic
[C] inelastic
[D] perfectly elastic
Show Answer
Correct Answer: A [more elastic]
Notes:
Substitute goods are those goods which can be used in place of each other. Examples of substitute goods are : tea and coffee; ghee and edible oil. In case of substitute goods like tea and coffee, demand for a commodity falls with a fall in the price of other substitute goods.
6. Which country is the world’s largest exporter of tea in 2025?
[A] China
[B] India
[C] Sri Lanka
[D] Kenya
Show Answer
Correct Answer: A [China]
Notes:
In 2024–25, China led global tea exports by value with $1,739 million, holding nearly 45% share and surpassing Kenya and Sri Lanka. While Kenya leads in black tea by volume, China remains the largest exporter overall based on latest official data.
7. National Social Assistance programme was initially rolled out in which of the following five year plans?
[A] Fifth Five Year Plan
[B] Sixth Five Year Plan
[C] Seventh Five Year Plan
[D] Eighth Five Year Plan
Show Answer
Correct Answer: D [Eighth Five Year Plan]
Notes:
The National Social Assistance Programme was launched in 1995 during 8th five year plan as a Centrally Sponsored Scheme of the Government of India. The scheme provides financial assistance to the elderly, widows and persons with disabilities in the form of social pensions.
8. Which Indian state is the largest producer of raw silk?
[A] Bihar
[B] West Bengal
[C] Assam
[D] Karnataka
Show Answer
Correct Answer: D [Karnataka]
Notes:
Karnataka produced 13,278 tonnes of raw silk in 2024-25, about 32% of India’s total. The state contributes approximately 45% of India’s mulberry silk. Major silk-producing districts are Mandya, Kolar, Chikkaballapur, and Ramanagara. Silk cultivation in Karnataka covers about 1.2 lakh hectares. The Silk Samagra-2 scheme supports sericulture in the state.
9. Consider the following components related to the balance of payments (BoP):
- Balance of Trade
- Foreign Direct Investments
- Foreign Portfolio Investments
- Foreign Aid
- Foreign Tourist Expenditures
- Domestic Tourism Expenditures
Which of the above are included in the balance of payments?
[A] Only 1, 2 & 5
[B] Only 1, 2, 3, 4 & 5
[C] Only 2, 3, 4 & 5
[D] Only 1, 2, 3 & 5
Show Answer
Correct Answer: B [Only 1, 2, 3, 4 & 5]
Notes:
The Balance of Payments (BoP) records all economic transactions between residents and the rest of the world. Items 1 (Balance of Trade), 2 (Foreign Direct Investments), 3 (Foreign Portfolio Investments), 4 (Foreign Aid), and 5 (Foreign Tourist Expenditures) are included in BoP. Item 6 (Domestic Tourism Expenditures) involves only domestic money flow and is not recorded in BoP.
10. The two presses of Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL) are located at:
[A] Mysore and Salboni
[B] Nashik and Dewas
[C] Mysore and Dewas
[D] Mumbai and Kolkata
Show Answer
Correct Answer: A [ Mysore and Salboni ]
Notes:
The two presses of Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL) are located at Mysore and Salboni.
