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. Which among the following is called India’s market watch dog?
[A] RBI
[B] SEBI
[C] NABARD
[D] SBI
Show Answer
Correct Answer: B [SEBI]
Notes:
The correct answer is SEBI (Securities and Exchange Board of India). SEBI was established in 1988 and became a statutory body in 1992. It regulates the securities market in India, protecting investor interests and promoting the development of the market. The RBI (Reserve Bank of India) primarily oversees monetary policy and banking regulation, while BSE (Bombay Stock Exchange) is a stock exchange, not a regulatory body.
2. In context with the currency management in India the responsibility for coinage vests with which of the following?
[A] Government of India
[B] Reserve Bank of India
[C] Currency Chests
[D] Commercial Banks
Show Answer
Correct Answer: A [Government of India]
Notes:
Government of India on the basis of the Coinage Act, 1906
3. In context of Budget, which among the following is not a Non-Plan Expenditure?
[A] Revenue and Capital Expenditure on interest payments
[B] Defense Expenditure
[C] Grants to State governments & Union territories
[D] Central Assistance to States and Union Territories
Show Answer
Correct Answer: D [Central Assistance to States and Union Territories]
Notes:
Non-Plan Expenditure refers to mandatory spending that does not require annual approval, primarily for ongoing commitments. 1. Revenue and Capital Expenditure on interest payments: This is a non-plan expenditure as it is a fixed obligation. 2. Defense Expenditure: This is also considered non-plan as it is a recurring expense. 3. Grants to State governments & Union territories: These are typically classified as non-plan expenditures since they are ongoing financial commitments. 4. Central Assistance to States and Union Territories: This is often categorized as plan expenditure because it is aimed at specific developmental projects and requires annual approval. Thus, the correct answer is Central Assistance to States and Union Territories as it is not a non-plan expenditure.
4. 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.
5. Which among the following is not an important payment and settlement systems in India?
[A] Clearing House Automated Payment System
[B] Real Time Gross Settlement System
[C] National Electronic Clearing System
[D] National Electronic Clearing System
Show Answer
Correct Answer: A [Clearing House Automated Payment System]
Notes:
Clearing House Automated Payment System CHAPS is in UK
6. What was the name of the world currency that John Maynard Keynes conceptualized in the years 1940-42 and proposed at the Bretton Woods Conference?
[A] Whuffie
[B] Bancor
[C] Wocu
[D] Terra
Show Answer
Correct Answer: B [Bancor]
Notes:
John Maynard Keynes proposed the “Bancor” as a world currency during the Bretton Woods Conference in 1944. The Bancor was intended to facilitate international trade and stabilize exchange rates. Keynes envisioned it as a unit of account to address imbalances in global trade. Although the Bancor was not adopted, the conference led to the establishment of the International Monetary Fund (IMF) and the World Bank, shaping the post-World War II economic order.
7. Foreign Direct Investment(FDI) and Foreign Institutional Investment(FII) are distinct in terms of?
[A] FDI brings capital, technology & management and FII brings only capital
[B] FDI targets specific sectors and FII help in increasing foreign capital availability
[C] FII is considered more stable
[D] FII targets both primary and secondary market while FDI targets only primary.
Show Answer
Correct Answer: A [FDI brings capital, technology & management and FII brings only capital]
Notes:
Foreign Direct Investment (FDI) involves long-term investments in physical assets, bringing capital, technology, and management expertise to a country. In contrast, Foreign Institutional Investment (FII) primarily involves short-term capital investments in financial markets, such as stocks and bonds, without direct control over businesses. FDI is typically more stable and less volatile than FII, which can quickly exit markets, impacting local economies. FDI often targets specific sectors for development, while FII can invest across various market segments.
8. Which statement best describes the term “Transfer Pricing” that India is contending with?
[A] It is a tax evasion method involving illicit capital flows out of the country
[B] It is a factor causing the continuous rise in food prices in India
[C] It is a recent phenomenon resulting in the bad loans of Indian banks
[D] It is a global phenomenon causing the devaluation of the Indian currency against reserve currencies
Show Answer
Correct Answer: A [It is a tax evasion method involving illicit capital flows out of the country]
Notes:
Transfer pricing refers to the pricing of goods or services within a multinational corporation or group. These transactions may not be influenced by market forces that typically shape relations between individual firms. This system allows for a possible method of tax evasion, where one party transfers goods or services to another for a specific price, often facilitating illicit capital flows out of the country.
9. Which of the following indicates a Liquidity trap?
[A] expansionary monetary policy does not encourage economic growth
[B] open market operations results in decrease in interest rates
[C] government prefers fiscal policies over monetary policies to regulate the money supply
[D] government undergoes liquidation of the government holdings on larger-scale to reduce fiscal deficit
Show Answer
Correct Answer: A [ expansionary monetary policy does not encourage economic growth ]
Notes:
Liquidity trap is a situation when expansionary monetary policy does not increase the interest rate, income and hence does not encourage the economic growth.
10. What total fertility rate is required to just replace the world’s existing population?
[A] 1.0
[B] 1.1
[C] 2.0
[D] 2.1
Show Answer
Correct Answer: D [ 2.1 ]
Notes:
Demographers have estimated that on a global scale, replacement-level fertility implies a total fertility rate of about 2.1, taking into account that some women never have children.However, replacement-level fertility in less developed countries is higher because ofhigher rates of mortality among children and young adults of childbearing age. The total fertility rate worldwide is about 2.52. Thus births continue to outnumber deaths and the world’s population is expected to continue to increase during the foreseeable future .
