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. As a wholly owned subsidiary of which of the following, the Small Industries Development Bank of India (SIDBI) was started in 1990?
[A] Industrial Investment bank of India Ltd
[B] Industrial Finance Corporation of India
[C] Industrial Development Bank of India
[D] Reserve Bank of India
Show Answer
Correct Answer: C [Industrial Development Bank of India]
Notes:
The Small Industries Development Bank of India (SIDBI) was established in 1990 as a wholly owned subsidiary of the Industrial Development Bank of India (IDBI). SIDBI’s primary role is to promote and finance small-scale industries in India, facilitating their growth and development. IDBI itself was established in 1964 to provide credit and development support to the industrial sector.
2. 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 refers to any plans of economic activity which point to achieve specific social and economic outcomes. It is a subject matter of concurrent list in 7th schedule of Indian constitution.
3. Which among the following are the features of Exchange Earners’ Foreign Currency Accounts:
- They are opened with RBI
- They Earn interests on deposits
- They need a minimum balance to be maintained by the account holder
Choose the correct options:
[A] Only 1
[B] 1 & 2
[C] 2 & 3
[D] None of them
Show Answer
Correct Answer: D [None of them]
Notes:
Exchange Earners’ Foreign Currency (EEFC) Accounts are special accounts in India that allow residents to hold foreign currency. 1. Opened with RBI: EEFC accounts are not directly opened with the Reserve Bank of India (RBI) but are maintained with authorized banks. 2. Earn interest: These accounts do earn interest on deposits, but the rate is typically lower than domestic currency accounts. 3. Minimum balance: There is no mandatory minimum balance requirement for EEFC accounts, making them flexible for account holders. Thus, the correct answer is “None of them” as none of the statements are entirely accurate.
4. Which among the following is correct representation of the Money Multiplier?
[A] Ratio of Broad Money (M3) to Reserved Money (M0) i.e. M3/M0
[B] Ratio of Broad Money (M3) to Narrow Money (M1) i.e. M3/M1
[C] Ratio of Narrow Money (M1) to Broad Money (M3) i.e. M1/M3
[D] Ratio of Narrow Money (M1) to Reserved Money (M0) i.e. M1/M0
Show Answer
Correct Answer: A [Ratio of Broad Money (M3) to Reserved Money (M0) i.e. M3/M0]
Notes:
The correct representation of the Money Multiplier is the ratio of Broad Money (M3) to Reserved Money (M0), expressed as M3/M0. The Money Multiplier indicates how much money supply can increase based on the reserves held by banks. M0 represents the total of a country’s physical currency, while M3 includes all liquid or near-liquid assets. This relationship is crucial in understanding monetary policy and banking operations.
5. Which among the following is the guiding principle of the concept of most favoured nations?
[A] that every nation has a preferred trading partner
[B] that nations should cooperate with other nations that cooperate with them
[C] non-discrimination among trading partners
[D] that each nation should be able to decide what other nations it prefers as trading partners
Show Answer
Correct Answer: C [ non-discrimination among trading partners ]
Notes:
The guiding principle of the Most Favoured Nation (MFN) concept is “non-discrimination among trading partners.” This principle, established in international trade agreements, ensures that any favorable trading terms offered by one country to another must be extended to all other trading partners. This concept is a cornerstone of the World Trade Organization (WTO) framework, promoting equality and preventing trade discrimination. The MFN principle aims to create a level playing field in international trade, fostering global economic cooperation.
6. Which among the following is not a component of monetary policy in India?
[A] Moral suasion
[B] Public Debt
[C] Repo rate
[D] Credit Rationing
Show Answer
Correct Answer: B [Public Debt]
Notes:
The public debt is how much a country owes to lenders outside of itself. The term “public debt” is often used interchangeably with the term sovereign debt. Public debt usually only refers to national debt.
7. Which among the following is/are correct regarding Call Money?
[A] No Collateral is required in Call Money transaction
[B] It is the money lent/borrowed for maximum period of 30 days
[C] It is the money lent/borrowed for maximum period of 45 days
[D] Banks borrow primarily from customers
Show Answer
Correct Answer: A [ No Collateral is required in Call Money transaction ]
Notes:
Call money is the money lent/borrowed for maximum period of 14 days. No Collateral is required in Call Money transaction. Banks borrow primarily from the inter-bank (call money) market.
8. Any change in flow of funds and the demand of them, is clearly reflected in which of the following?
[A] Call money market
[B] Money market
[C] Repo market
[D] Commercial bill market
Show Answer
Correct Answer: A [Call money market]
Notes:
Call money market reflects any change in flow of funds and the demand of them.
9. ‘Terms of trade’ between agriculture and industry has reference to?
[A] Relative price movements between the two sectors
[B] Relative quantities of production in the two sectors
[C] The extent of trade existent between the two sectors
[D] Relative international valuation of the agricultural produce in contrast to the industrial produce
Show Answer
Correct Answer: D [Relative international valuation of the agricultural produce in contrast to the industrial produce]
Notes:
Terms of trade between agriculture and industry can be thought of as the ratio of prices of agricultural products to that of prices of industrial products. This is analogous to International Terms of Trade that are given by the formula: (Price of exports)/ (price of imports).
10. Which among the following best describes scarcity in economics?
[A] Low demand for good
[B] High demand and less supply of good
[C] Low demand as people don’t want to consume it
[D] Goods available are not free
Show Answer
Correct Answer: D [Goods available are not free]
Notes:
Scarcity means limited goods are for more number of people. In an Economy the resources are scarce and the wants are unlimited.
