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. A systematic record of all economic transactions completed between residents of a country and the rest of the world in a year is known as..?
[A] Net Capital Flow
[B] Balance of Payment
[C] Balance of Trade
[D] Absolute Flow
Show Answer
Correct Answer: B [Balance of Payment]
Notes:
The Balance of International payments or Balance of Payments refers to the systematic and summary record of a country’s economic and financial transactions with the rest of the world, over a period of time.
The three main components of BoP are Current Account, Capital Account and Official Reserve Transactions
2. Through open market operations , RBI plays a very important role in which of the following markets?
[A] Gilt edged market
[B] Primary market
[C] Secondary market
[D] None of the above
Show Answer
Correct Answer: A [Gilt edged market]
Notes:
It’s a market for Gilt–edged Securities. These are high quality debt securities with very high credit worthiness issued by corporates or governments and hence they are named such. The probability of the organisation defaulting on interest and principle repayment is very low.
3. A Non-Resident Indian wants to get approval under Government Route for FDI in ‘Single Brand’ product retailing in India. Which among the following would be the appropriate agency to approach for this application?
[A] Regional Office of Reserve Bank of India
[B] Head Office of Reserve Bank of India
[C] Department of Economic Affairs (Ministry of Finance)
[D] Department of Industrial Policy and Promotion (Ministry of Commerce)
Show Answer
Correct Answer: D [Department of Industrial Policy and Promotion (Ministry of Commerce)]
Notes:
The correct agency to approach for FDI approval in ‘Single Brand’ retailing in India is the Department of Industrial Policy and Promotion (DIPP), now part of the Ministry of Commerce and Industry. This department is responsible for formulating and implementing policies related to foreign direct investment, including approvals for single brand retail, which allows foreign companies to operate retail stores in India under a single brand. The DIPP ensures compliance with the Foreign Exchange Management Act (FEMA) and other regulations.
4. What happens when a foreign bank operating in India does not meet its priority sector targets?
[A] It can deposit amount equivalent to the shortfall in Rural Infrastructure Development Fund
[B] It can deposit amount equivalent to the shortfall in SIDBI
[C] It can deposit amount equivalent to the shortfall in RBI
[D] It can lend amount equivalent to the shortfall to domestic banks
Show Answer
Correct Answer: B [ It can deposit amount equivalent to the shortfall in SIDBI ]
Notes:
Domestic banks having a shortfall in lending to priority sector/ agriculture are allocated amounts for contribution to the Rural Infrastructure Development Fund (RIDF) established in Nabard. In case of foreign banks operating in India, which fail to achieve the priority sector lending target or sub-targets, an amount equivalent to the shortfall is required to be deposited with SIDBI for one year.
5. Consider the following statements:
1. In comparison to other products, stocks markets offer higher returns and pose higher risks
2. Stock prices are governed by supply and demand
Which among the above is / are correct statements?
[A] Only 1
[B] Only 2
[C] Both 1 & 2
[D] Neither 1 nor 2
Show Answer
Correct Answer: C [ Both 1 & 2 ]
Notes:
Historically, investors earned higher returns from stocks than from other products. As return and risk are correlated, they were also exposed to higher risks. To absorb this risk, you need superior analytical skills, deeper pockets to diversify across the market and essentially, the right attitude to book losses or profits. Intelligent investing in stocks is therefore, never easy. You can buy stocks either in the primary market or in the secondary market. You need to be doubly sure that you are investing in a fundamentally sound company before writing the cheque for an IPO. Buying shares in secondary market can be done only through a registered broker or a sub-broker. Stock markets are places where buyers and sellers of stock meet to trade. The NSE and BSE is the most important exchanges in India. Stock prices change according to supply and demand. There are many factors influencing prices, the most important being earnings. There is no consensus as to why stock prices move the way they do.
6. Consider the following reports:
- Global Innovation Index
- Global Competitiveness Index
- Ease of doing business index
Which of the above is/are published by the World Bank?
[A] 2 & 3 Only
[B] 3 Only
[C] 1, 2 & 3
[D] None
Show Answer
Correct Answer: B [ 3 Only ]
Notes:
Global Innovation Index data is released by Cornell University, INSEAD and the World Intellectual Property Organization (WIPO). In 2016 ranking, Switzerland holds the top spot, while China was ranked 25th and India at 66th position. Global competitiveness index is prepared by the World Economic Forum. India was placed at 39th spot in the Global competitiveness index 2016-2017. The ease of doing business index is an index created by the World Bank Group. India ranked 130th in the index with Gujarat placed at top spot among Indian states in ease of doing business. Andhra Pradesh holds the second spot.
7. Which of the following are used as tool for the Liquidity adjustment facility (LAF)?
- Repo Rate
- Reverse Repo Rate
- Cash Reserve Ratio
- Statutory liquidity ratio
Select the correct option from codes given below:
[A] 1 & 2 Only
[B] 3 & 4 Only
[C] 1, 2 & 3 Only
[D] 1, 2, 3 & 4
Show Answer
Correct Answer: A [ 1 & 2 Only ]
Notes:
Liquidity adjustment facility (LAF) is a monetary policy tool which allows banks to borrow money through repurchase agreements. It consists of Rep and Reverse Repo Rate.
8. National Housing Bank is wholly owned by which of the following institutions?
[A] RBI
[B] SEBI
[C] SBI
[D] None of the Above
Show Answer
Correct Answer: A [RBI]
Notes:
NHB is wholly owned by Reserve Bank of India, which contributed the entire paid-up capital. The Head Office of NHB is at New Delhi. NHB was set up on July 9, 1988 under the National Housing Bank Act, 1987.
9. Where are the Headquarters of New Development Bank situated?
[A] Manila (Philippines)
[B] Shanghai (China)
[C] New Delhi (India)
[D] Beijing (China)
Show Answer
Correct Answer: B [Shanghai (China)]
Notes:
The New Development Bank which is also known as BRICS Development Bank has its headquarters in Shanghai, China. It is multilateral development bank established by BRICS states (Brazil, Russia, India, China and South Africa).
10. Which of the following is the distribution of the burden of paying a tax?
[A] Sharing of tax burden
[B] Shifting of the tax
[C] Incidence of a tax
[D] Tax capitalization
Show Answer
Correct Answer: C [Incidence of a tax]
Notes:
In economics, tax incidence or tax burden is the effect of a particular tax on the distribution of economic welfare. The introduction of a tax drives a wedge between the price consumers pay and the price producers receive for a product, which typically imposes an economic burden on both producers and consumers.
