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. Why the Transfer incomes are not included in the national income accounts?
[A] They do not represent payment for economic activity
[B] There is now way of calculating them correctly
[C] They are already included in the total of personal income
[D] They are already included in company earnings
Show Answer
Correct Answer: A [They do not represent payment for economic activity]
Notes:
Transfer payments made by the Government including subsidies, government aid, social security assistance such as health insurance payment and scholarship are not included in the national income. Because they do not represent any economic activity.
2. Approval of which among the following authorities alone would be sufficient to draw funds from Consolidated Fund of India ?
[A] Only Parliament
[B] Only President
[C] Either Parliament or President
[D] Both Parliament and President
Show Answer
Correct Answer: A [Only Parliament]
Notes:
No money can be appropriated (issued or drawn) out of Consolidated fund of India except in accordance with a parliamentary law.
3. Tea, Coffee, Spices, Coconut, Rubber, Cardamom, Tobacco all together can be kept in which of the following group or groups?
[A] Food Crop
[B] Cash Crops
[C] Food & Cash Crops
[D] Plantation Crops
Show Answer
Correct Answer: D [Plantation Crops]
Notes:Plantation crops are crops that are grown on large farms, called plantations, and are typically grown for commercial purposes. These crops are often grown on a large scale using specialized techniques and equipment, and are typically exported to other countries for sale. Some examples of plantation crops include:
- Sugar cane: This is a tropical grass that is grown for its sweet, juicy stalks, which are used to make sugar.
- Rubber: This is a tree that is grown for its latex, which is used to make rubber.
- Tea: This is a bush that is grown for its leaves, which are used to make tea.
- Coffee: This is a shrub that is grown for its beans, which are used to make coffee.
- Coconut: This is a tree that is grown for its fruit, which is used to make coconut milk and oil.
- Banana: This is a tree that is grown for its fruit, which is a popular food around the world.
- Palm oil: This is a tree that is grown for its fruit, which is used to make palm oil.
- Tobacco: This is a plant that is grown for its leaves, which are used to make tobacco products such as cigarettes.
- Cotton: This is a plant that is grown for its fibers, which are used to make textiles and other products.
Plantation crops are an important source of income and employment for many countries, and they contribute significantly to the global economy.
4. Which sector is the largest contributor to India’s GDP?
[A] Secondary sector
[B] Primary sector
[C] Tertiary sector
[D] Quaternary sector
Show Answer
Correct Answer: C [Tertiary sector]
Notes:
The tertiary (services) sector contributed about 54.93% to India’s GVA in 2024-25 (PE), making it the largest contributor. The primary sector contributed around 19.74%, and the secondary sector approximately 25.33%, consistently reflecting the dominance of the services sector over recent years.
5. Which of the following actions of Central Bank can increase deposit component of the money supply?
[A] Increasing reserve requirements / decreasing the volume of reserves
[B] Lowering reserve requirements / increasing volume of reserves
[C] Lowering reserve requirements / decreasing the volume of reserves
[D] Increasing reserve requirements / increasing volume of reserves
Show Answer
Correct Answer: C [Lowering reserve requirements / decreasing the volume of reserves]
Notes:
The correct answer is “Lowering reserve requirements / increasing volume of reserves.” When a central bank lowers reserve requirements, banks are allowed to hold less money in reserve and can lend more, which increases the money supply. Additionally, increasing the volume of reserves means banks have more funds available to lend, further boosting deposits. This mechanism is part of the monetary policy tools used to influence economic activity. For instance, during the 2008 financial crisis, the Federal Reserve lowered reserve requirements to stimulate lending and economic growth.
6. Which among the following has never been an agenda of Financial Sector Reforms in India?
[A] Providing easy credit to all citizens with subsidies guaranteed
[B] Deregulation of the interest rate regime
[C] Enabling regulatory framework for effective supervision
[D] Strengthening the Disclosure norms
Show Answer
Correct Answer: A [Providing easy credit to all citizens with subsidies guaranteed]
Notes:
The easy credit to all citizens with “subsidies guaranteed” can not be an agenda of financial sector reforms. Subsidies are provided to weaker sections of the society.
7. A monopolist will be able to maximize his profits when _________?
[A] His output is maximum
[B] He charges a Higher price
[C] His average cost is minimum
[D] His marginal cost is equal to the marginal revenue
Show Answer
Correct Answer: D [His marginal cost is equal to the marginal revenue]
Notes:
A monopolist can maximize profits when the marginal cost is equivalent to the marginal revenue. This strategy is implemented because the greatest profit occurs at the output level where the difference between total revenue and total cost is the greatest. This ensures economic efficiency and profit gains for the monopolist.
8. Economic Planning comes under which of the following lists ?
[A] Union List
[B] Concurrent list
[C] State List
[D] None of them
Show Answer
Correct Answer: B [Concurrent list]
Notes:
Economic planning is listed in the Concurrent List, or List III, of the Seventh Schedule of the Constitution of India. The Concurrent List is a list of 52 items that both the central and state governments can make laws on. The Concurrent List includes topics such as criminal law, marriage and divorce, bankruptcy, and economic and social planning.
9. Which among the following was not Stipulated in the Fiscal Responsibility And Budget Management Act 2003?
[A] Elimination of revenue deficit
[B] Elimination of primay deficit
[C] Non-borrowing by the central government from RBI except in certain situations
[D] Fixing government guarantees in any financial year as a percentage of GDP
Show Answer
Correct Answer: B [Elimination of primay deficit]
Notes:
The correct answer is “Elimination of primary deficit.” The Fiscal Responsibility and Budget Management (FRBM) Act of 2003 aimed to ensure fiscal discipline in India by targeting the elimination of revenue deficits and limiting government borrowing. However, it did not explicitly mandate the elimination of the primary deficit, which is the fiscal deficit excluding interest payments. The Act focuses on sustainable fiscal management rather than eliminating all forms of deficits.
10. National Small Savings Fund is a part of which among the following?
[A] Consolidated Fund of India
[B] Public Account of India
[C] Contingency Fund of India
[D] Prime Minister’s Relief Fund
Show Answer
Correct Answer: B [Public Account of India]
Notes:
The National Small Savings Fund (NSSF) is part of the Public Account of India. The Public Account includes funds that the government holds on behalf of others, such as small savings schemes, provident funds, and other deposits. The NSSF primarily manages the savings from various small savings schemes like the Public Provident Fund (PPF) and the National Savings Certificate (NSC). These funds are used for financing government projects and development activities.
