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 Bank Rate as per RBI's current definition?
[A] The rate at which RBI is ready to buy or rediscount bills of exchange or other commercial papers eligible for purchase
[B] The rate at which RBI lends short-term funds to banks against government securities under repo operations
[C] The rate at which commercial banks lend money to their customers
[D] The rate at which banks borrow overnight funds from RBI without collateral
Show Answer
Correct Answer: A [The rate at which RBI is ready to buy or rediscount bills of exchange or other commercial papers eligible for purchase]
Notes:
The Bank Rate is the standard rate notified by RBI for buying or rediscounting eligible bills of exchange or other commercial papers. It is not the same as the repo rate, which applies to short-term borrowing by banks against government securities. In the current operating framework, the Bank Rate is aligned with the MSF rate and is also used as the benchmark for certain penalty charges and related calculations.
2. 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
3. Which among the following plan document has a subtitle ” Inclusive growth” ?
[A] 10th Five year Plan
[B] 11th Five year Plan
[C] National Solar Mission
[D] Bhart Nirman
Show Answer
Correct Answer: B [11th Five year Plan]
Notes:
The correct answer is the 11th Five Year Plan. Launched in 2007, it emphasized “Inclusive Growth” to address poverty and inequality in India. This plan aimed to enhance social and economic development, focusing on sectors like education, health, and rural development. The 11th Plan set a target of 9% GDP growth, which indicates the importance of inclusive policies for sustainable development.
4. Which tool is used for sterilization during foreign capital inflows to control inflation?
[A] Filtering undeclared foreign assets
[B] Selling government securities in the open market
[C] Imposing restrictions on foreign exchange trading
[D] Allowing currency to appreciate freely
Show Answer
Correct Answer: B [Selling government securities in the open market]
Notes:
Sterilization involves central banks selling government securities in the open market to absorb liquidity created by foreign capital inflows. The Reserve Bank of India uses open market operations for this purpose. By selling government securities, the central bank withdraws excess rupee liquidity from the banking system. This method helps limit the expansion of the money supply and manage inflationary pressures resulting from increased foreign exchange reserves.
5. Progressive taxation aligns with which principle in tax theory?
[A] Benefit principle
[B] Cost of service theory
[C] Ability to pay principle
[D] Equity of sacrifice approach
Show Answer
Correct Answer: C [Ability to pay principle]
Notes:
The ability to pay principle is a basis for progressive taxation, taxing individuals according to their income levels. Progressive tax rates increase as income rises under this principle. India’s income tax is based on this principle, with tax slabs laid down in the Income Tax Act, 1961. Most modern tax systems, including those of the UK and India, use this approach.
6. What fraction of BSE market capitalization is from BSE SENSEX 30 stocks?
[A] 10%
[B] 20%
[C] 30%
[D] 40%
Show Answer
Correct Answer: C [30%]
Notes:
The BSE SENSEX consists of 30 large, actively traded stocks. As of January 2026, BSE’s total market capitalization was approximately $5,001.331 billion. Historically, SENSEX 30 stocks account for around 30% of the BSE’s total market capitalization. The SENSEX was established in 1986 and is the primary benchmark index of the Bombay Stock Exchange.
7. What does “bear market” mean in stock market terminology?
[A] A period when stock prices rise steadily
[B] Foreign investors outperform domestic investors
[C] Higher investment in money market than capital market
[D] Stock prices fall 20% or more from recent highs for at least two months
Show Answer
Correct Answer: D [Stock prices fall 20% or more from recent highs for at least two months]
Notes:
A bear market is a prolonged phase of falling stock prices, usually defined as a drop of 20% or more from a recent peak. It reflects weak market sentiment, rising pessimism, and reduced investor confidence. The decline is not a short-lived dip; it generally persists long enough to be recognized as a broader downtrend in the market.
8. The basic WTO principle with reference to trade barriers is that:
[A] Trade barriers can be imposed by any country that believes it will benefit from such trade barriers
[B] Trade barriers should be lowered equally and without discrimination for all member countries
[C] Trade barriers can be imposed if a majority of the members of the WTO agree
[D] Trade barriers should be the same in all member countries so that the result is equivalent to free trade
Show Answer
Correct Answer: B [Trade barriers should be lowered equally and without discrimination for all member countries]
Notes:
The WTO promotes non-discriminatory trade rules and seeks gradual reduction of trade barriers among its members. Under the Most-Favored-Nation principle, any advantage given to one member should be extended to all members unless a specific exemption applies. This helps prevent selective treatment in international trade and supports fair competition among countries. Hence, the correct statement is that trade barriers should be lowered equally and without discrimination for all member countries.
9. Consider the following statements:
- Stocks offer higher average returns than bonds and other fixed-income investments, but with correspondingly higher volatility and risk.
- Stock prices are primarily governed by supply and demand, with earnings being the most important influencing factor.
Which of the above statements is/are correct?
[A] Both 1 and 2
[B] Only 1
[C] Only 2
[D] Neither 1 nor 2
Show Answer
Correct Answer: A [Both 1 and 2]
Notes:
Both statements are correct. Historically, stocks have yielded higher average returns than bonds, but with greater short-term volatility and risk. Stock prices move according to supply and demand dynamics, but corporate earnings are widely recognized as the most significant fundamental factor driving these price changes and influencing investor sentiment and market pricing.
10. India’s first tribal circuit tourism project has launched in which state?
[A] Assam
[B] Rajasthan
[C] Madhya Pradesh
[D] Chhattisgarh
Show Answer
Correct Answer: D [Chhattisgarh ]
Notes:
India’s first tribal circuit tourism project under the Swadesh Darshan scheme has launched at Gangrel in Chhattisgarh on September 13. It covers 13 sites in Chhattisgarh which are Jashpur, Kunkuri, Mainpat, Kamleshpur, Maheshpur, Kurdar, Sarodadadar, Gangrel, Kondagaon, Nathiya Nawagaon, Jagdalpur, Chitrakoot and Tirthgarh. Under the tribal circuit theme of the scheme the Ministry of Tourism has sanctioned 4 projects to Nagaland, Telangana and Chhattisgarh for Rs. 380 crore. Major components sanctioned in the tribal circuit theme include eco log huts, craft haats, souvenir shops or kiosk, tourist reception and facilitation centres, open amphitheatre, tribal interpretation centres, workshop centres, tourist amenities centres, last mile connectivity, wayside amenities, viewpoints, nature trails, solar illuminations, signages and solid waste management among others. The Swadesh Darshan scheme was launched in 2014 -15 for development of thematic circuits in the country in a planned and prioritized manner.
