Indian Economy MCQs

Notes:
Inflation refers to rise in general price level of goods and services, deflation is fall in general price level of goods and services. Deflation is inflation in negative zone, i.e. a decrease in the general price level of goods and services.

Notes:
David Ricardo, an English classical economist, developed the law of rent in 1809. He presented the law in his book On the Principles of Political Economy and Taxation in 1821.
Ricardo’s theory defined rent as the portion of the earth’s produce that is paid to the landlord for the original and indestructible powers of the soil. In other words, rent is the price paid for the use of land.
Ricardo developed his theory to explain the origin and nature of economic rent. He used the economy and rent to analyze the large rise in corn and land prices during the Napoleonic wars (1805-1815).
The term “Ricardian rent” comes from Ricardo’s theory.

Notes:
Monopsony refers to a market structure in which a single buyer substantially controls the market as the major purchaser of goods and services offered by many sellers.

Notes:
Sikkim produces about 80% of India’s large cardamom. It is grown mainly in the Himalayan region of Sikkim due to the favorable climate and altitude. Sikkim’s production reached approximately 5.591 thousand tonnes in 2025. The government initiative “Mero Alaichi, Mero Dhan” supports cardamom cultivation in Sikkim. Assam, Gujarat, and Kerala do not match Sikkim’s output in this crop.

Notes:
Countervailing duties are tariffs imposed on imported goods to offset subsidies provided to producers or exporters in the exporting country. This aims to level the playing field for domestic producers who compete with subsidized imports. The World Trade Organization (WTO) allows such duties to counteract unfair trade practices.

Notes:
Circular trading involves participants repeatedly buying and selling the same securities within a group. This creates fake market activity without changing ownership. Circular trading is banned under SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003. SEBI monitors for such patterns using price bands and volume filters. The practice is classified as market manipulation under Indian securities law.

Notes:
The Reserve Bank of India can use credit rationing to limit money supply. Credit rationing is a monetary policy tool of RBI. Progressive taxation and public sector expenditure are managed by the Government of India as fiscal policy. Regulation of foreign direct investment flows is also executed by the government. RBI and government use separate policy instruments for inflation control.

Notes:
Emissions trading (aka. cap and trade) refers to the market-based approach to control pollution by providing economic incentives for reducing the emissions of pollutants.

Notes:
Margin requirements ensure investors maintain a minimum equity percentage in their accounts. Initial margin is set before a trade, and maintenance margin must be upheld throughout. If equity falls below the maintenance margin, a margin call is issued. This system aims primarily to protect brokers and lenders from losses if securities lose value. U.S. regulations on margin trading are set by the Federal Reserve Board under Regulation T.

Notes:

Various irrigation schemes in India were classified by the erstwhile planning commission into three parts viz. Minor, Medium and Major Irrigation schemes.

• Major irrigation Scheme: Major irrigation schemes are those schemes which have a Culturable Command Areas of More than 10,000 hectares.
• Medium irrigation Schemes: The Medium Irrigation Schemes have a CCA of 2,000-10,000 hectares.
• Minor Schemes: Those with Culturable command areas up to 2000 hectares.

Cultural command area is the basis for the design of water course and basis for the design of an irrigation project. It is the proportion of the Gross Command Area which is Culturable and cultivable.