Indian Economy MCQs
Indian Economy Multiple Choice Questions (MCQs) for State and UPSC Civil Services Examinations. Objective Questions on Indian Economy for competitive examinations.
41. The Special Economic Zones help the economy by__:
1. Attracting FDI
2. Attracting Domestic Investments
3. Increasing capital formation
4. Decreasing Current Account deficit
Choose the correct option from the codes given below:
[A] Only 1 & 2
[B] Only 1, 2 & 3
[C] Only 1 & 3
[D] 1, 2, 3 & 4
Show Answer
Correct Answer: D [ 1, 2, 3 & 4 ]
Notes:
The main objectives of the SEZ Act are: (a) generation of additional economic activity (b) promotion of exports of goods and services; (c) promotion of investment from domestic and foreign sources; (d) creation of employment opportunities; (e) development of infrastructure facilities;
42. Which of the following is / are correct statements with respect to the Indian Depository Receipts (lDRs)?
- They allow investors abroad in Indian Companies
- They are denominated in Indian Rupees
- They are issued by a domestic depository in India
- They cannot be listed in stock exchanges
Select the correct statements from the codes given below:
[A] 1, 2 & 3
[B] 2 & 3
[C] 2, 3 & 4
[D] 1, 2, 3 & 4
Show Answer
Correct Answer: B [ 2 & 3 ]
Notes:
An IDR is a mechanism that allows investors in India to invest in listed foreign companies, including multinational companies, in Indian rupees. IDRs give the holder the opportunity to hold an interest in equity shares in an overseas company. IDRs are denominated in Indian Rupees and issued by a Domestic Depository in India. They can be listed on any Indian stock exchange. Anybody who can invest in an IPO (Initial Public Offer) is/are eligible to invest in IDRs. In other words, what ADRs/GDRs are for investors abroad with respect to Indian companies, IDRs are for Indian investors with respect to foreign companies.
43. The Contra funds are _:
1. likely to perform well in the long run, but not in the short term
2. likely to perform well in the short run, but not in the long term
3. issued with guaranteed return and as a contract
4. those funds in which ONLY corporate investors are allowed to invest
Choose the correct statements from the codes given below:
[A] Only 1
[B] Only 1, 2 & 3
[C] Only 2 & 3
[D] Only 1 & 4
Show Answer
Correct Answer: A [ Only 1 ]
Notes:
As the name suggests, these funds take a contrarian view on equities. The fund manager picks underperforming stocks or sectors, which are likely to perform well in the long run, at cheap valuations. For instance, experts held a contrarian view on telecom stocks for a two-year period. These funds are mostly a part of the equity-diversified category. The difference lies in the style of investing. For instance, a strengthening rupee strains the margins of IT companies as their major business comes from the US. But, a contra fund manager would pick IT stocks and wait for the rupee to weaken. ING Contra, Kotak Contra, L&T Contra, Magnum Contra, Religare Contra, Tata Contra and UTI Contra are some known contra funds.
44. Recently, India secured the World Trade Organization’s (WTO’s) permission to establish a dispute settlement panel to rule on controversial unilateral duties imposed by the US on the imports of steel and aluminium under the controversial US Section 232 security provisions. Which among the following is / are functions of WTO?
- Setting rules for international trade
- Settlements of International Trade Dispute
- Lending Money for foreign trade
- Lending foreign exchange for facilitation of international trade
Select the correct statements from the codes given below:
[A] Only 1 & 2
[B] Only 1, 2 & 3
[C] Only 1, 2 & 4
[D] Only 1
Show Answer
Correct Answer: A [ Only 1 & 2 ]
Notes:
The first and second statements are correct. The WTO has a dispute resolution mechanism.
45. Consider the following:
- All loans raised by the Government by the issue of treasury bills
- Ways and means advances
- Judicial deposits
Which of the above is/are credited to Consolidated Fund of India?
[A] Only 1
[B] Only 1 & 2
[C] Only 2 & 3
[D] 1, 2 & 3
Show Answer
Correct Answer: B [ Only 1 & 2 ]
Notes:
Examples of monies that go into consolidated fund include all revenues received by the Government of India or any state, all loans raised by the issue of treasury bills, loans or ways and means advances and all moneys received by the Government in repayment of loans.
Examples of monies that go into public account include: provident fund deposits, judicial deposits, savings bank deposits, departmental deposits, remittances and so on.
46. With reference to the formation of a public limited company in India, consider the following steps:
1. Obtaining a certificate of commencement of business
2. Drawing up the Memorandum of Association
3. Drawing up the Articles of Association
4. Obtaining approval for the proposed name of company from the Registrar of the Companies
Which among the following is the correct order of the above steps?
[A] 1 2 3 4
[B] 4 2 3 1
[C] 4 3 2 1
[D] 4 1 2 3
Show Answer
Correct Answer: B [ 4 2 3 1 ]
Notes:
A public company is defined as one, which is not a private company. In other words, a public company is one on which the above restrictions do not apply. Summary of steps involved in forming a company: 8 STEP 1 : START 8 STEP 2 : Obtaining approval for the proposed name of the company from the ROC 8 STEP 3 : Drawing up the Memorandum of Association 8 STEP 4 : Drawing up the Articles of Association 8 STEP 5 : Getting the appropriate persons to subscribe to the Memorandum (a minimum of 7 for a public company and 2 for a private company) 8 STEP 6 : Payment of Registration Fee to the ROC 8 STEP 7 : Receipt of Certificate of Incorporation 8 STEP 8 : Obtain a certificate of commencement of business from the ROC in case of a public company 8 STEP 9 : END
47. Consider the following difference(s) between NITI Aayog and planning commission of India:
- NITI Aayog is more likely to focus on policy formulation and coordination, and less on fund allocation compared to planning commission
- While NITI Aayog has no provision for part-time members, planning commission had part time members
Which of the above statements is/are correct?
[A] 1 Only
[B] 2 Only
[C] Both 1 & 2
[D] Neither 1 nor 2
Show Answer
Correct Answer: A [ 1 Only ]
Notes:
Second statement is incorrect because NITI Aayog has provisions for part time members whereas planning commission had no provision for part time members.
48. Which among the following are the ‘Revenue Receipts’ of the Government?
1.Corporation Tax
2.Grants Received from a foreign country
3.Loans from International Fund
4. Interest free loans from IDA
Select the correct option from the codes given below:
[A] Only 1
[B] Only 1 & 2
[C] Only 1, 2 & 3
[D] 1, 2, 3 & 4
Show Answer
Correct Answer: B [ Only 1 & 2 ]
Notes:
Any such income of the government which does not increase its liability is revenue. This implies that if Government borrows from IMF, it cannot be its revenue. However, if government gets a grant from World Bank, it will be revenue (because it does not increase liability as grants are not repaid). The most important source of revenue receipts is obviously taxation. Taxation includes direct and indirect taxes. There are some other non-tax revenues such as profit earned by government companies, interest earned on money which government has lent to borrowers (internal as well as borrowers / Dollars as well as Rupees), money earned by government via stamp printing and sales etc, money earned by government via its business activities such as providing banking services, insurance, fees, penalties, fines. Finally, all the grants which Union Government gets from foreign sources is also revenue receipt. For state government, the grants come from central government.
49. Consider the following pairs:
- Pomology – Cultivation of fruits
- Olericulture – Cultivation of vegetables
- Floriculture – Cultivation of ornamental crops
Which of the above is/are correct?
[A] 1 & 2 Only
[B] 3 Only
[C] 2 & 3 Only
[D] 1, 2 & 3
Show Answer
Correct Answer: D [ 1, 2 & 3 ]
Notes:
Explanation
All of the above pairs are correctly matched
Pomology is associated with fruit culture, Olericulture with vegetable culture and Floriculture with culture of ornamental crops
50. The Kovvada Atomic Power Plant Project has been proposed in which state?
[A] Telangana
[B] Karnataka
[C] Tamil Nadu
[D] Andhra Pradesh
Show Answer
Correct Answer: D [ Andhra Pradesh ]
Notes:
With an aim to make Andhra Pradesh the country’s nuclear power hub, government recently proposed Kovvada Atomic Power plant to be set up in Andhra Pradesh. The construction work is estimated to start in 2018 and the production to begin by 2024. Out of installation capacity of 6,600 MW produced at the plant, 3,300 MW will be allocated to AP at affordable rates.
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