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 industry is not part of the Index of Eight Core Industries?
[A] Electricity
[B] Crude Oil
[C] Natural Gas
[D] Pharmaceuticals
Show Answer
Correct Answer: D [Pharmaceuticals]
Notes:
The Index of Eight Core Industries includes Coal, Crude Oil, Natural Gas, Refinery Products, Fertilizers, Steel, Cement, and Electricity. Pharmaceuticals are not included in this index. The Index serves as an indicator for measuring the industrial performance in India, and is released monthly by the Ministry of Commerce and Industry since 2004.
2. On which of the following Date a Bank publishes its balance sheet ?
[A] March 31
[B] April 1
[C] December 31
[D] January 1
Show Answer
Correct Answer: A [March 31]
Notes:
The financial year of India begins from April 1 of a calendar year and ends on March 31 of the next calendar year. This system has been into existence since the British Raj in India. Hence, Banks in India publish their financial statements / balance sheets for March 31st of every year.
3. Who published “The Case for Flexible Exchange Rates” in 1953?
[A] John Maynard Keynes
[B] Milton Friedman
[C] Friedrich Lutz
[D] Harry Johnson
Show Answer
Correct Answer: B [Milton Friedman]
Notes:
Milton Friedman published “The Case for Flexible Exchange Rates” in 1953. Friedman’s essay advocated flexible exchange rates to provide monetary policy independence. The paper provided the foundational arguments and theory supporting flexible exchange rate systems over fixed ones. Friedman’s analysis influenced international monetary economics from the 1950s onward.
4. If the people prefer to keep cash with them rather than deposits, which among the following impacts will be seen on the Money Supply of the country?
[A] The money supply of the country will increase
[B] The money supply of the country will decrease
[C] The money supply of the country will not change
[D] The money supply of the country may increase or decrease
Show Answer
Correct Answer: B [The money supply of the country will decrease]
Notes:
If people prefer to keep cash with them rather than making deposits in banks, the impact on the Money Supply of the country will be as follows:
[B] The money supply of the country will decrease.
The reason for this is that money supply is typically categorized into different measures, with M1 and M2 being common examples. M1 includes currency (physical cash) in circulation and demand deposits (checking accounts). When people hold more cash and make fewer deposits, it reduces the amount of money in demand deposits, which are considered a part of the money supply. Therefore, if people choose to keep more cash on hand, it reduces the overall money supply in the country, leading to a decrease.
5. Which of the following Government gets the stamp duty collected on promissory notes?
[A] State Government 100%
[B] Central Government 100 %
[C] State Government 50% and Central Government 50%
[D] State Government 25% and Central Government 75%
Show Answer
Correct Answer: A [State Government 100%]
Notes:
The correct answer is “State Government 100%.” In India, stamp duty on promissory notes is governed by the Stamp Act of 1899, which allows state governments to levy stamp duty. Each state has the authority to set its own rates, and the revenue collected from stamp duty is retained entirely by the state government. This is a important source of revenue for states, contributing to their financial resources for development and public services.
6. The term “cartelization” is mainly linked with which of the following groups?
[A] Small traders in local markets
[B] Independent firms formally agreeing to cooperate
[C] Individual investors in competitive markets
[D] Government-regulated monopolies
Show Answer
Correct Answer: B [Independent firms formally agreeing to cooperate]
Notes:
Cartelization describes independent firms entering formal agreements to control prices, limit supply, or divide markets. It typically involves actions such as price fixing or market-sharing. Cartelization is prohibited under the Competition Act, 2002 in India. In 2022, India’s Competition Commission imposed penalties on cement companies for cartelization. Cartels are illegal in many countries and are monitored by regulatory bodies to ensure market competition.
7. Central Employment Guarantee Council overlooks the progress of which among the following scheme?
[A] MGNREGA
[B] Food for Works Programme
[C] National Rural Livelihood Mission
[D] All of them
Show Answer
Correct Answer: A [MGNREGA]
Notes:
Central Employment Guarantee Council was constituted under Section 10 of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), 2005 to discharge the duties and functions under this act.
8. Which action increases cash reserves of commercial banks by RBI?
[A] Release gold from its reserves
[B] Purchase government securities in open market operations
[C] Prohibit bills of exchange transactions
[D] Increase IMF tranche reserves
Show Answer
Correct Answer: B [Purchase government securities in open market operations]
Notes:
The Reserve Bank of India increases cash reserves of commercial banks by purchasing government securities through open market operations. When government securities are purchased, funds are transferred to commercial banks, raising their cash reserves. OMOs are used by the RBI as a monetary policy instrument to regulate liquidity and money supply. As of 2023, RBI actively uses OMOs to manage system liquidity.
9. Which region is renowned for natural guano fertilizer deposits?
[A] Coastal headlands and islands of Peru
[B] Atacama desert
[C] Tierra del Fuego
[D] Minas Gerais of Brazil
Show Answer
Correct Answer: A [Coastal headlands and islands of Peru]
Notes:
Coastal headlands and islands of Peru, especially the Chincha Islands, are known for rich guano deposits. By 1250 CE, the Chincha Kingdom harvested seabird guano from these islands for agricultural fertilizer. Guano collection continued as a major economic activity through the colonial era. The Humboldt Current supports abundant seabird populations that produce the guano deposits.
10. Which sector uses the largest share of natural gas produced in India?
[A] Fertilizers
[B] City Gas Distribution (Cooking Gas)
[C] Power Production
[D] Refineries
Show Answer
Correct Answer: B [City Gas Distribution (Cooking Gas)]
Notes:
City Gas Distribution sector accounted for the highest consumption share of domestically produced natural gas in India as of FY2026. The CGD segment supplies households and sectors including CNG and PNG. Gas consumption by fertilizers, power, and refineries declined until FY2026. Government reports show CGD maintained demand growth, unlike other sectors. Policy measures support expansion in urban gas infrastructure since 2018.
