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. Which among the following is a Progressive Tax?
[A] Customs duty
[B] Development Surcharge
[C] Income tax
[D] Sales tax
Show Answer
Correct Answer: C [Income tax]
Notes:
In progressive taxation, the tax liability increases with individual or entity income. This is based on principle of “ability to pay”. Under this system, lowest income people are generally exempted while highest income people pay highest taxes. Income Tax is thus an example of progressive tax. Progressive taxation results in redistribution of income from rich to poor.
2. Many a times we come across an acronym BOLT which is used in Infrastructure financing. What is the full form?
[A] Build, Operate, Lend, Transfer
[B] Build, Operate, Lease, Transfer
[C] Build, Own , Lease, Transfer
[D] Build, Observe, Lend , Transfe
Show Answer
Correct Answer: B [Build, Operate, Lease, Transfer]
Notes:
Full form is “Build, Operate, Lease, Transfer”. This model refers to a system where a private entity builds and operates an infrastructure project for a fixed period after which the ownership and operations are transferred back to the public entity through a lease arrangement.
3. Which among the following is considered as an important power of World Bank?
[A] World Bank has right to insist on pegged parities
[B] World Bank has right to float Bonds and use the proceeds for loans
[C] World Bank has right to buy gold below current Gold prices
[D] All are correct
Show Answer
Correct Answer: B [World Bank has right to float Bonds and use the proceeds for loans]
Notes:
The correct answer is that the World Bank has the right to float bonds and use the proceeds for loans. This is a crucial function as it allows the World Bank to raise capital from international markets to fund development projects in member countries. The World Bank issues bonds to investors, which are backed by the institution’s financial strength and the repayment capacity of its borrowing countries. This mechanism is vital for financing infrastructure, education, and health projects globally. The World Bank has issued bonds since its inception in 1944, making it one of the largest issuers of bonds in the world.
4. Which among the following does not come under the monetary policy for regulating the economy?
[A] Discount rate
[B] Government spending
[C] reserve requirement
[D] Open market Operations
Show Answer
Correct Answer: B [Government spending]
Notes:
Government spending refers to the money spent by the government or public sector on the acquisition of goods and services such as education, healthcare, social protection, defence etc. It does not come under monetary policy.
5. Which among the following authority appoints a Deputy Governor in Reserve Bank of India?
[A] Governor of RBI
[B] Central Board of Directors
[C] Central Government
[D] Committee of the Central Board
Show Answer
Correct Answer: C [Central Government]
Notes:
The correct answer is “Central Government.” In India, the Deputy Governors of the Reserve Bank of India (RBI) are appointed by the Central Government under Section 8 of the Reserve Bank of India Act, 1934. The RBI has four Deputy Governors, and their roles include overseeing various departments such as monetary policy, financial markets, and banking regulation. This appointment process reflects the government’s influence on the central bank’s operations.
6. What are the General Anti-Avoidance Rules?
[A] GAAR is a set of rules aimed at curbing aggressive tax planning
[B] GAAR is a set of rules aimed at curbing money laundering by Indians to Foreign countries
[C] GAAR is a set of rules aimed at regulating investments by Indians in foreign Countries
[D] GAAR is a set of rules aimed at regulating investments by Foreigners in India
Show Answer
Correct Answer: A [GAAR is a set of rules aimed at curbing aggressive tax planning]
Notes:
General Anti-Avoidance Rule or GAAR is a broad set of rules aimed at curbing aggressive tax planning. These rules will empower tax authorities to disregard any arrangement if its main purpose is to obtain tax benefit. The arrangement as a whole or in part may be disregarded and tax benefit denied.
7. In India, Tank irrigation is more common in which of the following regions?
[A] Rocky plateu regions with uneven and highly seasonal rainfalls
[B] Regions with presence of perennial rivers and plenty of rainfall
[C] Arid and Semi Arid regions with scanty rainfallÂ
[D] Coastal regions with regular rainfallÂ
Show Answer
Correct Answer: A [Rocky plateu regions with uneven and highly seasonal rainfalls]
Notes:
The Tank irrigation is more in the rocky plateau area of the county, where the rainfall is uneven and highly seasonal. The Eastern Madhya Pradesh, Chhattisgarh, Orissa, Interiors of Tamil Nadu and some parts of Andhra Pradesh have more land under tank irrigation.
8. Which of the following denotes ‘shares outstanding’ ?
[A] Difference between authorised capital and issued capital of a company
[B] Difference between issued capital and subscribed capital of a company
[C] Difference between subscribed capital and paid up capital of a company
[D] Shares of the company issued and purchased by investors and are held by them
Show Answer
Correct Answer: D [ Shares of the company issued and purchased by investors and are held by them ]
Notes:
D is correct answer.
9. Which of the following is the correct definition of ‘Effective Revenue Deficit’?
[A] difference between revenue deficit and grants for creation of capital assets
[B] difference between revenue deficit and interest liabilities of the Government
[C] difference between fiscal receipt and net expenditure of the government
[D] difference between fiscal receipt and money spent on various social services
Show Answer
Correct Answer: A [ difference between revenue deficit and grants for creation of capital assets ]
Notes:
Effective Revenue Deficit is the difference between revenue deficit and grants for creation of capital assets.
10. In context with the share markets in India, public issue refers to which of the following?
[A] first time issuance of shares of a company via stock exchange
[B] first time issuance of shares of a public company via stock exchange
[C] allotment of shares to 50 or more investors
[D] allotment of shares to public by 50% or more fraction of the total equity
Show Answer
Correct Answer: C [ allotment of shares to 50 or more investors ]
Notes:
The primary market issuance is done either through public issues or private placement. Under Companies Act, 1956, an issue is referred as public if it results in allotment of securities to 50 investors or more. However, when the issuer makes an issue of securities to a select group of persons not exceeding 49 and which is neither a rights issue nor a public issue it is called a private placement.
