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.
41. What is the FDI allowed by India in the petroleum refining sector?
[A] 51%
[B] 49%
[C] 100%
[D] None
Show Answer
Correct Answer: B [49%]
Notes:
India allows 49% FDI in the petroleum refining sector. 100% FDI is allowed in oil fields.
42. Which is the largest Uranium exporting country in the world?
[A] Kazakhstan
[B] Canada
[C] Australia
[D] France
Show Answer
Correct Answer: A [Kazakhstan]
Notes:
Kazakhstan is the world’s largest Uranium exporting country and also the world’s largest producer. The top 3 exporters are Kazakhstan, Canada, Ukraine.
43. What is the opportunity cost of a factor of production?
[A] what it is earning in its present use
[B] what it can earn in the long period
[C] what has to be paid to retain it in its present use
[D] what it can earn in some other use
Show Answer
Correct Answer: D [what it can earn in some other use]
Notes:
The opportunity cost of an option is the value of the best alternative left out, in a situation that requires a choice between several mutually exclusive alternatives given limited resources.
44. Where does the law of diminishing returns apply?
[A] All sectors
[B] Industrial sector
[C] Agricultural sector
[D] Service sector
Show Answer
Correct Answer: A [All sectors]
Notes:
Classical economists were of the view that the law of diminishing returns only applies to agriculture and some quarrying industries, such as mining, fisheries, urban land, etc. However, this also applies to other sectors such as manufacturing.
45. Other things being equal, what can cause a decrease in the quantity demanded of a commodity?
[A] a rise in the price of the commodity
[B] a rise in the income of the consumer
[C] a fall in the price of a commodity
[D] a fall in the income of the consumer
Show Answer
Correct Answer: A [a rise in the price of the commodity]
Notes:
In economics, the law states that, all else being equal, as the price of a product increases, quantity demanded falls; and vice versa. So the quantity demanded and the price of a commodity is inversely related, other things remaining constant.
46. The equilibrium price of a commodity will definitely increase if:
[A] increase in supply combined with a decrease in demand
[B] increase in both demand and supply
[C] decrease in both demand and supply
[D] increase in demand accompanied by a decrease in supply
Show Answer
Correct Answer: D [increase in demand accompanied by a decrease in supply]
Notes:
Price of a commodity is always determined by the forces of demand and supply in the market. The price at which the amount demanded and amount supplied are equal is known as ‘equilibrium price.’ The equilibrium price definitely increases when there is an increase in demand combined with the decrease in supply.
47. Which of the following is non-contractual income?
[A] Interest
[B] Rent
[C] Profit
[D] Wage
Show Answer
Correct Answer: C [Profit]
Notes:
Contractual income is the income paid on a contract basis over a specific period of time. Salary, rent, interest, etc. come under contractual income. Because they are decided by the contract between the employee and the organization. profit is a residual income; It is the remainder from the sale of goods after deducting all wages, interest and rent. So profit is not a contractual income
48. What happens when there is a lack of demand in an economy?
[A] Poverty
[B] Stagnation
[C] Recession
[D] Inflation
Show Answer
Correct Answer: B [Stagnation]
Notes:
Deficit demand refers to the situation when the aggregate demand for goods and services falls short of the aggregate supply of output. It is produced by fully employing the given resources of the economy. This reduction in demand leads to a decrease in production, employment and prices in the economy. According to Malthus, lack of demand can lead to stagnation. In this both capital and labor are redundant relative to opportunities to employ them profitably.
49. Pegging a currency means fixing the value of a currency:
[A] at a constant level
[B] at a lower level
[C] at a higher level
[D] leaving it to market force
Show Answer
Correct Answer: A [at a constant level]
Notes:
Currency pegging is the idea of fixing the exchange rate of one currency to the value of another single currency or a basket of other currencies, or by matching it to another measure of value, such as gold or silver. A fixed exchange rate is usually used to stabilize the value of a currency, in relation to the currency or other value for which it is pegged.
50. National Disposable Income does not include which of the following?
[A] Net National Product at Factor cost
[B] Gifts to the government in cash and kind
[C] Indirect taxes
[D] Subsidy
Show Answer
Correct Answer: D [Subsidy]
Notes:National Disposable Income = Net National Product at market prices + Other current transfers from the rest of the world. The idea behind National Disposable Income is that it gives an idea of what is the maximum amount of goods and services the domestic economy has at its disposal. Current transfers from the rest of the world include items such as gifts, aids, etc.
- NNP at factor cost + Indirect Taxes – Subsidy = NNP at market prices
