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. What is the relationship between ‘Dear money’ & ‘Cheap money’ in Economics Terminology?
[A] Both of the terms are synonyms
[B] Both of them are antonyms
[C] They are unrelated in terms of their meaning
[D] Dear Money is white Money , cheap money is black money
Show Answer
Correct Answer: B [Both of them are antonyms]
Notes:
Dear money is available at exceptionally high rate of interest and cheap money is available at very low rates
2. Pump priming mainly deals with which of the following?
[A] Increased government expenditure during recession
[B] Decreased government expenditure during recession
[C] Increased government income during recession
[D] Decreased government income during recession
Show Answer
Correct Answer: A [Increased government expenditure during recession]
Notes:
Pump priming is a fiscal policy tool used to revive economic activity during a slowdown or recession. It involves increasing public expenditure and often reducing taxes so that demand in the economy rises. Higher government spending creates jobs, boosts consumption, and encourages investment, which helps economic recovery. Therefore, pump priming mainly refers to increased government expenditure during recession.
3. Which of the following is not a core principle of progressive taxation?
[A] Ability to pay
[B] Equity and redistribution
[C] Vertical fairness
[D] Administrative convenience
Show Answer
Correct Answer: D [Administrative convenience]
Notes:
Progressive taxation is designed around the ability-to-pay principle, where taxpayers with higher incomes contribute at higher rates. Its main goals include equity, vertical fairness, and redistribution of income toward a more balanced tax burden. Administrative convenience is a useful feature of any tax system, but it is not considered a core principle of progressive taxation itself. Therefore, the correct answer is administrative convenience.
4. Which of the following is not a Selective Credit Control measure?
[A] Margin Requirements
[B] Regulation of Consumer Credit
[C] Rationing of Credit
[D] Open Market Operations
Show Answer
Correct Answer: D [Open Market Operations]
Notes:
Qualitative or selective methods of credit control refers to those methods which limit the nature or variety of money supply rather than its quantity. Such methods include regulation of margin requirement, credit rationing, regulation of consumer credit and direct action. Open Market Operations is a quantitative method of credit control.
5. How many currencies are included in the BIS REER basket?
[A] 6
[B] 26
[C] 36
[D] 64
Show Answer
Correct Answer: D [64]
Notes:
The Bank for International Settlements (BIS) calculates the broad real effective exchange rate (REER) index using a basket of 64 currencies. The BIS methodology weights these currencies according to trade shares to reflect the competitiveness of a country in the global market. BIS also publishes narrower REER indices, like a 27-currency basket, but the broadest index uses 64 currencies.
6. What are the General Anti-Avoidance Rules?
[A] GAAR is a set of rules aimed at curbing aggressive tax planning
[B] GAAR is a set of rules aimed at curbing money laundering by Indians to Foreign countries
[C] GAAR is a set of rules aimed at regulating investments by Indians in foreign Countries
[D] GAAR is a set of rules aimed at regulating investments by Foreigners in India
Show Answer
Correct Answer: A [GAAR is a set of rules aimed at curbing aggressive tax planning]
Notes:
General Anti-Avoidance Rule or GAAR is a broad set of rules aimed at curbing aggressive tax planning. These rules will empower tax authorities to disregard any arrangement if its main purpose is to obtain tax benefit. The arrangement as a whole or in part may be disregarded and tax benefit denied.
7. Which among the following is the chief characteristic of the primary industry of the developed countries?
[A] Larger farm size and increasing corporate ownership of farms
[B] Larger farm size and more government ownership of farms
[C] Smaller farm size and a diversity of crops on each farm
[D] Smaller farm size and fewer family-owned farms
Show Answer
Correct Answer: A [Larger farm size and increasing corporate ownership of farms]
Notes:
Consider agriculture in the developed countries such as United States and Canada. There, the small family farms are not able to earn a profit and are being replaced by large corporate farms.
8. Which of the following bodies procures, distributes, exports and imports agricultural commodities?
[A] FCI
[B] NAFED
[C] NABARD
[D] All of them
Show Answer
Correct Answer: B [ NAFED ]
Notes:
NAFED is the apex body in cooperative sector and deals in procurement , distribution, export and import of selected agricultural commodities.
9. What is amortization in banking?
[A] A lump-sum repayment of loan at maturity
[B] Gradual repayment with both principal and interest
[C] Payment of interest only, principal at end
[D] Writing off intangible asset expenses
Show Answer
Correct Answer: B [Gradual repayment with both principal and interest]
Notes:
Amortization refers to scheduled loan repayment through periodic payments including both principal and interest. Each payment gradually reduces the outstanding loan balance. Early payments cover more interest; later ones pay more principal. Mortgages and term loans typically follow an amortization schedule with set time frames like 15 or 30 years. The balance decreases with every regular installment.
10. SIDO is associated with which of the following industries?
[A] Small industry
[B] Iron industry
[C] Steel industry
[D] Soap industry
Show Answer
Correct Answer: A [Small industry]
Notes:
The Small Industries Development Organization (SIDO) is the national SME Development Agency of India. It is a major constituent of the Ministry of Small Scale Industries of the Government of India. It was Set up in 1954, SIDO provides services to small industry throughout the country by implementing a broad program of activities and services like Entrepreneurship Development, Tool Room Services, Testing Centres, Extension Services, R&D Services, etc.
