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. Which of the following is called the third state of the law of variable proportions?
[A] negative returns
[B] positive returns
[C] constant returns
[D] increasing returns
Show Answer
Correct Answer: A [negative returns]
Notes:
The steps of the Law of Variable Ratios are:
Step 1: Increasing Returns;
Step 2: Decreasing Return; and
Step 3: negative returns.
In the third step, the marginal product of the variable factor remains zero. In this stage the total product starts decreasing.
42. When the demand for a commodity increases with increase in income, what is such a good called?
[A] Superior good
[B] Giffin good
[C] Inferior good
[D] Normal good
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Correct Answer: C [Inferior good]
Notes:
In McConnell’s words, demand for the factors of production is a derived demand derived from the finished goods and services that resources help in production. Whereas demand for a commodity is direct demand, demand for factors is derived demand. It is based on the productivity of the factors.
43. A proposal which seeks to reduce the quantity of demand submitted by the government to Rs. 1/ Known as__
[A] Disapproval of policy Cut
[B] Token cut
[C] Economy cut
[D] Vote on account
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Correct Answer: A [Disapproval of policy Cut]
Notes:
The rejection of the policy deduction attempts to reduce the amount of the demand to Rs 1/-, which represents the rejection of the policy contained in the demand. The member giving notice of such motion shall state in precise words the details of the policy which he proposes to discuss.
44. What can improve the competitive position of a company?
[A] increasing the selling price
[B] reducing the margin of profit
[C] ignoring competitors
[D] understanding and fulfilling customers needs
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Correct Answer: D [understanding and fulfilling customers needs]
Notes:
A company’s competitive position depends on its ability to understand changes in customer demands and respond appropriately with goods and services that meet those demands.
45. Rent is a factor payment which is paid by which of the following?
[A] land
[B] restaurant
[C] building
[D] factory
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Correct Answer: A [land]
Notes:
Factor payment refers to the payment made to the factors of production in exchange for scarce resources or productive services. Rent is services for the land.
46. Expenses for increasing production capacity?
[A] Revenue expenditure
[B] Production expenditure
[C] Investment expenditure
[D] Capital expenditure
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Correct Answer: C [Investment expenditure]
Notes:
The expenditure incurred either by an individual or a firm or the government for the creation of new capital assets like machinery, building etc. are called Investment expenditure. Investment expenditures are a key factor in the short-run macroeconomic analysis of business cycles.
47. What is Income and Expenditure Account?
[A] Property Account
[B] Personal Account
[C] Nominal Account
[D] Capital Account
Show Answer
Correct Answer: C [Nominal Account]
Notes:
Accounts which are related to expenses, losses, incomes or gains are called Nominal accounts. The final result of all nominal accounts is either profit or loss which is then transferred to the capital account. Personal accounts are related to individuals, firms, companies, etc.
48. The government had some time back constituted a committee under the chairmanship of the chairman of the Central Board of Direct Taxes, what is to be known?
[A] codification of tax laws
[B] the entire structure of tax laws including the question of imposition of bank tax
[C] the concerns of the foreign investors in India with regard to taxation matters
[D] aspects of the generation of black money, its transfer abroad and bringing back such money into India’s legitimate financial system
Show Answer
Correct Answer: D [aspects of the generation of black money, its transfer abroad and bringing back such money into India’s legitimate financial system]
Notes:
The Central Board of Direct Taxes (CBDT) panel on black money had recently suggested implementation of new laws, strengthening the existing law and introduction of deterrent punishment for tax offenses to tackle the menace. It suggests measures to combat black money in India and abroad, to prevent creation of illicit money through transactions in property, bullion and equity markets.
49. Who governs the money supply?
[A] Planning Commission
[B] Finance Commission
[C] Reserve Bank of India
[D] Commercial Banks
Show Answer
Correct Answer: C [ Reserve Bank of India]
Notes:
The money supply or money stock, is the total amount of monetary assets available in an economy at a specific time. It is governed and regulated by the central bank of a country. The Reserve Bank of India regulates the money supply in India through its several policy rates and reserve ratios.
50. Which is not a characteristic of capitalist economy?
[A] Right to private property
[B] Existence of competition
[C] Service motive
[D] Freedom of choice for consumers
Show Answer
Correct Answer: C [Service motive]
Notes:
Capitalism is an economic system in which each individual in his capacity as a consumer, producer, and the resource owner is engaged in economic activity with a large measure of economic freedom. The inspiring force in this system is self-interest and maximization of profit. The decisions of businessmen, farmers, and producers, including that wage-earners are based on the profit motive.
