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 a suitable term for the state of economy in which economic activity is slowing down but wages and prices continue to rise ?
[A] Inflation
[B] Deflation
[C] Skweflation
[D] Stagflation
Show Answer
Correct Answer: D [Stagflation]
Notes:
Stagflation refers to persistent high inflation coupled with high unemployment and stagnant demand /growth in economy.
High Inflation + Low Economic Growth {or conditions of recession} + Low Employment Generation = Stagflation
2. “Lockout” is term used for a work stoppage in industry for which of the following?
[A] Employees refuse to work
[B] Employer prevents employees from working
[C] Trade unions prevent the employees to work
[D] Employer close the work premises permanently
Show Answer
Correct Answer: B [Employer prevents employees from working]
Notes:
In the context of industry, a lockout is a temporary measure used by employers to prevent workers from entering the workplace. This is typically done in response to a labor dispute or strike, and is intended to protect the employer’s property and ensure the safety of workers and others on the premises. A lockout may be imposed by an employer unilaterally, or it may be agreed upon as part of a collective bargaining agreement with a labor union. During a lockout, workers are not allowed to enter the workplace or perform their duties, and the employer may not provide any work or pay to the affected workers. A lockout can have significant economic and social consequences for both the employer and the affected workers, and is generally considered a last resort in the resolution of labor disputes.
3. Which among the following defines ‘currency depreciation” of a currency?
[A] Fall in the exchange rate of one currency in terms of other currencies
[B] Fall in the exchange rate of other currencies in terms of one currencies
[C] Decrease in the volume of a particular currency
[D] Increase in the exchange rate of a currency
Show Answer
Correct Answer: A [Fall in the exchange rate of one currency in terms of other currencies]
Notes:
Currency depreciation is the loss of value of a country’s currency with respect to one or more foreign reference currencies. This is a term used in floating exchange rate system, where the exchange rates of a currency are market driven and not fixed by the country’s central bank.
4. An investor or speculator who subscribes to a new issue with the intention of selling them soon after allotment to realize a quick profit is called?
[A] Stag
[B] Tall
[C] Bull
[D] Bear
Show Answer
Correct Answer: A [Stag]
Notes:
The term stag means a speculator who buys and sells stocks in short timeframes to make quick profits. The motove of stag is to make profit quickly on a fast moving trend, rather than buying and holding for the long run.
5. Which is called the “Soft Loan Window” of the World Bank?
[A] International Monetary Fund
[B] International Finance Corporation
[C] International Development Association
[D] World Trade Organization
Show Answer
Correct Answer: C [International Development Association]
Notes:
The International Development Association (IDA) was established in 1960 as part of the World Bank Group. IDA offers highly concessional loans and grants to the world’s poorest countries. As of fiscal year 2025, IDA has provided $600 billion to 116 countries. Its concessional loans typically have repayment periods of up to 40 years with long grace periods and low or zero interest.
6. Which is the biggest borrower in India?
[A] Indian Government
[B] Reserve Bank of India
[C] Indian Railways
[D] State Governments
Show Answer
Correct Answer: A [Indian Government]
Notes:
The Indian central government projected total debt is ₹214.82 lakh crore by March 2027. In FY 2026-27, the government plans to borrow ₹17.2 lakh crore through gross market borrowings. Net market borrowings are projected at ₹11.7 lakh crore. Reserve Bank of India mainly conducts monetary operations and does not borrow such amounts. State governments’ borrowings are lower than the Centre.
7. 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.
8. If interest payments are subtracted from gross fiscal deficit, the remainder will be__:
[A] Revenue deficit
[B] Gross primary deficit
[C] Capital deficit
[D] Budgetary deficit
Show Answer
Correct Answer: B [ Gross primary deficit ]
Notes:
Primary deficit is the gross deficit which is obtained by subtracting interest payments from budget deficit of any country of a particular year. We need to know the value of primary deficit, while calculating the fiscal deficit. Alternative Definition of Primary Deficit Primary deficit corresponds to the net borrowing, which is required to meet the expenditure excluding the interest payment. Primary Deficit = (Fiscal Deficit – Interest Payment)
9. Open market operations (OMO):
- act as a monetary tool of RBI
- are conducted for the sale or purchase of government securities
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: C [Both 1 & 2]
Notes:
Both are correct statementsRBI conducts open market operations by selling government securities in order to maintain ample liquidity in the system.
10. Which type of foreign exchange rate system does India follow?
[A] Fixed
[B] Free float
[C] Managed float
[D] Fixed target band
Show Answer
Correct Answer: C [Managed float]
Notes:
India has a managed floating exchange rate system since 1994. The Reserve Bank of India intervenes in the foreign exchange market to reduce excessive volatility. The rupee exchange rate is mainly determined by market demand and supply. The system allows daily fluctuations, with the RBI entering the market when necessary to maintain orderly conditions.