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. The Core inflation is different from the general inflation because of the following?
[A] Core Inflation is caused by the supply Shock in certain essential commodities
[B] Core Inflation is the sudden increase in certain items of food grains
[C] Core Inflation is the inflation rate of a particular basket of commodities
[D] Core Inflation is just a misnomer
Show Answer
Correct Answer: C [Core Inflation is the inflation rate of a particular basket of commodities]
Notes:
Core Inflation is the rate of inflation calculated to exclude certain items that are subject to sudden and short-lived price movements, mainly food and energy. Core inflation is considered a better indicator of overall long-term than un-adjusted headline inflation.
2. During inflation, how do banks usually set their loan prices?
[A] A decreasing trend
[B] Constant level
[C] No relation to inflation
[D] An increasing trend
Show Answer
Correct Answer: D [An increasing trend]
Notes:
Inflation reduces currency purchasing power and drives general price increases. Banks respond by raising loan prices due to higher costs, including increased wages and operational expenditures. Central banks often hike interest rates during inflation to control rising prices. Higher interest rates result in increased loan pricing by banks to maintain profit margins.
3. Which institution publishes the World Economic Outlook Report?
[A] Federal Reserve Bank
[B] World Bank
[C] International Monetary Fund
[D] International Finance Corporation
Show Answer
Correct Answer: C [International Monetary Fund]
Notes:
The International Monetary Fund was established in 1944. The IMF has 190 member countries. The World Economic Outlook Report is published by the IMF biannually. The report provides analyses and projections of the global economy. The WEO was first published in 1980. Updates to the report are typically released in January and July.
4. What is the main objective of setting up fair price shops?
[A] To demote speculation and hoarding
[B] To incentivise the trading of essential commodities
[C] To eliminate the monopoly of the traders and speculators
[D] To make the essential commodities available to the weaker sections of the society
Show Answer
Correct Answer: D [To make the essential commodities available to the weaker sections of the society]
Notes:
Fair price shops form part of India’s Public Distribution System since 1947. They provide essential commodities such as grains, sugar, and kerosene to people below the poverty line at subsidized prices. The Targeted Public Distribution System was introduced in 1997 to further improve the food security for economically vulnerable sections. Only ration cardholders can purchase from these shops as per government rules.
5. Which option best demonstrates cross-selling in a sales scenario?
[A] A salesperson suggests a premium whisky with local liquor.
[B] A fast-food worker offers fries with a sandwich order.
[C] A salesperson suggests a pricier laptop with upgrades.
[D] A salesperson offers in-car floor liners with a car purchase.
Show Answer
Correct Answer: B [A fast-food worker offers fries with a sandwich order.]
Notes:
Cross-selling involves suggesting additional complementary products to a customer’s original purchase. In fast-food chains, offering fries with a sandwich exemplifies this. According to retail practices adopted since the 1970s, cross-selling combos are widely used to increase overall sales figures. Major restaurant chains such as McDonald’s and Burger King commonly use this technique globally.
6. In which year RBI was empowered to regulate money, forex, G-sec and gold related securities market?
[A] 2004
[B] 2006
[C] 2008
[D] 2010
Show Answer
Correct Answer: B [2006]
Notes:
The Reserve Bank of India (RBI) was empowered to regulate the money, foreign exchange, government securities, and gold-related securities markets in 2006. This was part of the amendments made to the Reserve Bank of India Act, 1934, which aimed to enhance the regulatory framework and improve market efficiency. The move was important in promoting financial stability and transparency in India’s financial markets.
7. Which among the following agency is responsible for enforcement of Foreign Exchange Management Act 1999 and Prevention of money Laundering Act 2002 in India?
[A] Reserve Bank of India
[B] Department of Revenue
[C] Enforcement Directorate
[D] Income Tax Department
Show Answer
Correct Answer: C [Enforcement Directorate]
8. Where can popular tourist attractions such as Chatham Saw Mill, Wandoor Beach, Mount Harriet and Limestone Caves be found?
[A] Goa
[B] Andaman and Nicobar Islands
[C] Lakshadweep
[D] Tamil Nadu
Show Answer
Correct Answer: B [Andaman and Nicobar Islands]
Notes:
The tourist attractions mentioned, including the Chatham Saw Mill, which is one of the oldest and largest saw mills in Asia, and the scenic Wandoor Beach, along with Mount Harriet, the third highest peak in the Andamans offering stunning views, and the intrigue-filled Limestone Caves are all located in the beautiful Andaman and Nicobar Islands. This Indian Union Territory in the Bay of Bengal is rich in natural beauty and historical significance.
9. Who among the following heads the Trade and Economic Relations Committee (TERC) in India?
[A] Prime Minister
[B] Minister of Commerce
[C] Finance Minister
[D] Finance Secretary
Show Answer
Correct Answer: A [Prime Minister]
Notes:
The Trade and Economic Relations Committee (TERC) in India is headed by the Prime Minister. This committee was established to enhance India’s trade relations and economic policies, reflecting the government’s focus on international trade as a key driver of economic growth. The Prime Minister’s leadership underscores the importance of trade in India’s economic strategy.
10. Which statement defines RBI’s lender of last resort (LOLR) function?
[A] RBI meets all commercial bank demands, regardless of financial status
[B] RBI meets reasonable demands of solvent banks with temporary liquidity crises
[C] RBI lends exclusively to governments for budget deficits
[D] RBI offers LOLR facilities to all NBFCs without restrictions
Show Answer
Correct Answer: B [RBI meets reasonable demands of solvent banks with temporary liquidity crises]
Notes:
The Reserve Bank of India acts as lender of last resort by granting emergency funds to solvent commercial banks facing temporary liquidity shortages. RBI does not provide funds to insolvent banks. RBI charges a penal rate to discourage frequent usage. This function aims to avert bank runs and ensure overall banking system stability. RBI’s LOLR role traditionally applies to commercial banks, not all financial institutions.
