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 of the following pairings does not represent a set of complementary goods?
[A] Printers and Ink Cartridges
[B] Tea and Sugar
[C] Mobile Phones and SIM cards
[D] Tea and Coffee
Show Answer
Correct Answer: D [Tea and Coffee]
Notes:
Complementary goods, defined by their negative cross elasticity of demand, are products whose demand is influenced by one another. When the price of a good declines, the demand for its complementary good rises. Printers need ink cartridges, tea is often consumed with sugar, and mobile phones require SIM cards for operation. However, tea and coffee are substitutes, not complements, as they are consumed separately and often in place of one another, hence they are not complementary goods.
2. Which goods are consumed collectively by the community?
[A] Public Goods
[B] Consumer Goods
[C] Non-durable Goods
[D] Durable Goods
Show Answer
Correct Answer: A [Public Goods]
Notes:
Public goods are non-excludable and non-rivalrous commodities or services. They are made available to all members of society without direct payment. Examples include national defense, clean air, and street lighting. Governments usually fund public goods due to the free rider problem. Paul Samuelson formally defined public goods in 1954. Provision and maintenance typically rely on taxation and government administration.
3. What does the FDI trigger list in India primarily include?
[A] List of country-specific FDI restrictions under FEMA
[B] Sectors needing prior approval, like broadcasting and civil aviation
[C] Investors with suspicious funds and sectors or locations needing security screening
[D] All proposals submitted to DPIIT for automatic route processing
Show Answer
Correct Answer: C [Investors with suspicious funds and sectors or locations needing security screening]
Notes:
The FDI trigger list in India includes proposals from investors with suspicious sources of funds and investments in sensitive sectors like broadcasting, telecommunications, civil aviation, and private security agencies. Investments in sensitive geographic areas, such as Jammu & Kashmir, are also included. Such proposals are scrutinized by the Ministry of Home Affairs for national security under the Foreign Exchange Management Act.
4. Who is the largest shareholder in NSDL as of August 2025?
[A] National Stock Exchange
[B] IDBI Bank
[C] SUUTI
[D] State Bank of India
Show Answer
Correct Answer: A [National Stock Exchange]
Notes:
As of August 2025, National Stock Exchange became the largest shareholder in NSDL after IDBI Bank reduced its stake by selling 11.11% in the IPO, retaining 14.99%. NSE holds a 24% stake. NSDL was established in 1996. Regulatory norms restrict non-institutional ownership in depositories to 15% in India. NSDL facilitates electronic securities settlement nationwide.
5. The P/E is one of the most talked about ratios in the stock market. What does P/E refer to____?
[A] Profit to Expenditure
[B] Price to Earning
[C] Profit to Earning
[D] Provisional to Estimates
Show Answer
Correct Answer: B [Price to Earning]
Notes:
The P/E ratio, or Price to Earnings ratio, is a key financial metric used to evaluate a company’s valuation. It is calculated by dividing the market price per share by the earnings per share (EPS). A high P/E ratio may indicate that a stock is overvalued or that investors expect high growth rates in the future, while a low P/E may suggest undervaluation or poor growth prospects. The P/E ratio is widely used by investors to compare the relative value of companies within the same industry.
6. What is the main difference between FDI and FII?
[A] FII is more stable than FDI
[B] FDI targets only infrastructure sectors
[C] FII needs stricter regulatory approval
[D] FDI is long-term in assets; FII is short-term in securities
Show Answer
Correct Answer: D [FDI is long-term in assets; FII is short-term in securities]
Notes:
Foreign Direct Investment (FDI) involves long-term investment in a business’s physical assets, often bringing technology and management expertise. Foreign Institutional Investment (FII) involves short-term capital investment in financial securities like stocks and bonds without management control. FDI investors establish a lasting presence, while FIIs are passive shareholders without operational involvement. FDI is typically more stable compared to FII, which can exit markets quickly.
7. What is vertical farming?
[A] Growing unrelated crops together in the same tract of land
[B] Growing related crops together in the same tract of land
[C] Cultivating crops inside multi-storey buildings
[D] Using aquaculture, sericulture, pisciculture, and bee culture together
Show Answer
Correct Answer: C [Cultivating crops inside multi-storey buildings]
Notes:
Vertical farming uses multi-storey buildings to grow crops in urban environments. The method utilizes hydroponics or aeroponics. This allows for agriculture independent from soil and weather conditions. The technique optimizes space and supports year-round production. Commercial vertical farms have been established in countries such as Japan, Singapore, and the United States since the early 2000s.
8. Consider the following components related to the balance of payments (BoP):
- Balance of Trade
- Foreign Direct Investments
- Foreign Portfolio Investments
- Foreign Aid
- Foreign Tourist Expenditures
- Domestic Tourism Expenditures
Which of the above are included in the balance of payments?
[A] Only 1, 2 & 5
[B] Only 1, 2, 3, 4 & 5
[C] Only 2, 3, 4 & 5
[D] Only 1, 2, 3 & 5
Show Answer
Correct Answer: B [Only 1, 2, 3, 4 & 5]
Notes:
The Balance of Payments (BoP) records all economic transactions between residents and the rest of the world. Items 1 (Balance of Trade), 2 (Foreign Direct Investments), 3 (Foreign Portfolio Investments), 4 (Foreign Aid), and 5 (Foreign Tourist Expenditures) are included in BoP. Item 6 (Domestic Tourism Expenditures) involves only domestic money flow and is not recorded in BoP.
9. In context with banking in India, a Custodial Account is created for __:
[A] Illiterates
[B] Women
[C] Minor persons
[D] Senior Citizens
Show Answer
Correct Answer: C [ Minor persons ]
Notes:
A Custodial Account in India is specifically designed for minor persons, allowing adults to manage assets on behalf of minors until they reach the age of majority, which is 18 years. This type of account ensures that minors can benefit from investments and savings while being protected under legal guardianship. Custodial accounts are commonly used for educational savings and other financial planning purposes for children.
10. Which of the following is not included in the World Bank Group?
[A] IBRD
[B] IDA
[C] MIGA
[D] UNCTAD
Show Answer
Correct Answer: D [ UNCTAD ]
Notes:
The World Bank Group (WBG) is a family of five international organizations that make leveraged loans to developing countries. Its five organizations are the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA) and the International Centre for Settlement of Investment Disputes (ICSID). UNCTAD is the principal organ of the United Nations General Assembly dealing with trade, investment, and development issues. The primary objective of UNCTAD is to formulate policies relating to all aspects of development including trade, aid, transport, finance and technology.
