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 India’s rank in the Travel and Tourism Development Index 2024?
[A] 34th
[B] 54th
[C] 38th
[D] 39th
Show Answer
Correct Answer: D [39th]
Notes:
The World Economic Forum published the Travel and Tourism Development Index 2024. India was ranked 39th among 119 countries in this index. The index measures factors supporting tourism development globally. India’s position improved over previous years. The Travel and Tourism Development Index is released every two years.
2. With reference to the Union Budget of India, the expenditure classification follows which of the following broad categories?
[A] Revenue expenditure and Capital expenditure
[B] Plan expenditure and Non-Plan expenditure
[C] Developmental expenditure and Non-developmental expenditure
[D] Borrowed expenditure and Tax-funded expenditure
Show Answer
Correct Answer: A [Revenue expenditure and Capital expenditure]
Notes:
From Budget 2017-18 onward, the Government of India did away with the Plan and Non-Plan classification of expenditure. The budget now uses the more standard and meaningful classification into Revenue expenditure and Capital expenditure, which better reflects the nature of government spending.
3. Which among the following was previously known as Imperial Bank of India?
[A] State bank of India
[B] Reserve Bank of India
[C] Punjab National bank
[D] ICICI
Show Answer
Correct Answer: A [State bank of India]
Notes:
The correct answer is State Bank of India (SBI). It was established in 1955, evolving from the Imperial Bank of India, which itself was formed in 1921. The Imperial Bank was a successor to the Bank of Calcutta, founded in 1806, making SBI one of the oldest banks in India. SBI is now the largest bank in India, serving millions of customers worldwide.
4. Which of the following gets the stamp duty on promissory notes in India?
[A] Union Government levies the duty, but the proceeds go to the State Government
[B] State Government levies the duty and keeps the entire proceeds
[C] Union Government and State Government share the duty equally
[D] State Government levies the duty, but the proceeds go to the Union Government
Show Answer
Correct Answer: A [Union Government levies the duty, but the proceeds go to the State Government]
Notes:
Stamp duty on promissory notes is a Union levy under the Indian Stamp Act, but the revenue is assigned to the States. In constitutional terms, the Union imposes the duty, while the States collect and retain the proceeds under Article 268. This makes the proceeds a State revenue item, even though the taxing power for these instruments is not exercised by the States themselves.
5. 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.
6. With reference to the terms Deflation and Disinflation, which among the following statements is / are correct?
- Deflation is negative inflation, Disinflation is negative inflation growth
- Deflation increases the real value of money, Disinflation has no impact on value of money
Select the correct option from the codes given below:
[A] Only 1 is correct
[B] Only 2 is correct
[C] Both 1 & 2 are correct
[D] Neither 1 nor 2 is correct
Show Answer
Correct Answer: A [ Only 1 is correct ]
Notes:
In economics, deflation is a decrease in the general price level of goods and services. Deflation occurs when the inflation rate falls below 0% (a negative inflation rate). This should not be confused with disinflation, a slow-down in the inflation rate (i.e. when inflation declines to lower levels) Inflation reduces the real value of money over time; conversely, deflation increases the real value of money – the currency of a national or regional economy. This allows one to buy more goods with the same amount of money over time.
7. What does the greenshoe option allow underwriters to do during an IPO?
[A] Sell up to 15% additional shares beyond the original offering
[B] Record investor demands and change IPO pricing
[C] Purchase shares back from investors at a discount
[D] None of the above
Show Answer
Correct Answer: A [Sell up to 15% additional shares beyond the original offering]
Notes:
The greenshoe option is an IPO underwriting clause first used by Green Shoe Manufacturing Company. It allows underwriters to sell up to 15% extra shares above the original IPO amount to support share price stability and meet demand. The Securities and Exchange Commission permits this clause. The option helps underwriters stabilize prices by covering over-allotted shares in the aftermarket.
8. Consider the following:
Real Estate Investment Trust
Railway operation
Insurance sector
As of February 2026, foreign direct investment (FDI) is not permitted in which of the above sector(s)?
[A] 1 Only
[B] 2 Only
[C] 1 and 2 Only
[D] None
Show Answer
Correct Answer: B [2 Only]
Notes:
FDI is not permitted in railway operation as a broad sector, though investment is allowed in specified rail infrastructure activities under the policy. Real Estate Investment Trusts (REITs) registered and regulated under SEBI regulations are excluded from the definition of real estate business, so FDI is permitted in them. The insurance sector has also been opened up to 100% FDI under the automatic route. Therefore, only statement 2 is correct.
9. Which tool involves central banks signaling future interest rate intentions?
[A] Forward guidance
[B] Quantitative easing
[C] Open market operations
[D] Reserve requirements
Show Answer
Correct Answer: A [Forward guidance]
Notes:
Forward guidance was widely adopted after the 2008 global financial crisis. The Federal Reserve began explicit forward guidance in 2011. The European Central Bank used this tool in 2013. The Bank of Japan started using forward guidance in 2013. Forward guidance aims to influence market expectations about future monetary policy. It became prominent when policy rates approached zero, limiting conventional monetary tools.
10. Which of the following was the operational period of 12th Five Year Plan?
[A] 2007–12
[B] 2012–17
[C] 2015–20
[D] 2005–10
Show Answer
Correct Answer: B [2012–17]
Notes:
Twelfth Plan (2012–2017) of the Government of India has been decided to achieve a growth rate of 8.2% but the National Development Council (NDC) on 27 December 2012 approved a growth rate of 8% for the Twelfth Five-Year Plan.
