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. First state in India to launch a policy to establish Special Agriculture Zones (SAZs):
[A] Uttar Pradesh
[B] Gujarat
[C] Haryana
[D] Uttarakhand
Show Answer
Correct Answer: D [Uttarakhand]
Notes:
Uttarakhand was the first state to set up Special Agricultural Zones (SAZs) in 2011. It was launched on the lines of the Special Economic Zones (SEZs). It encouraged the farmers to develop high-quality crop seeds typical to hilly regions.
2. Which among the following defines ‘currency depreciation” of a currency?
[A] Fall in the exchange rate of one currency in terms of other currencies
[B] Fall in the exchange rate of other currencies in terms of one currencies
[C] Decrease in the volume of a particular currency
[D] Increase in the exchange rate of a currency
Show Answer
Correct Answer: A [Fall in the exchange rate of one currency in terms of other currencies]
Notes:
Currency depreciation is the loss of value of a country’s currency with respect to one or more foreign reference currencies. This is a term used in floating exchange rate system, where the exchange rates of a currency are market driven and not fixed by the country’s central bank.
3. When a loan provided by a group of lenders and is structured, arranged, and administered by one or several commercial or investment banks, it is called as __?
[A] Loan shark
[B] Loan Syndication
[C] Loan covenant
[D] Package loan
Show Answer
Correct Answer: B [Loan Syndication]
Notes:
Loan syndication is the process which involves a group of lenders to fund various portions of a loan for a single borrower. Loan syndication most often used when a borrower requires a large quantum of funds which generally cannot be lent by a single lender.
4. Which among the following authority decides upon any issues regarding the revision of fee collected as Development Fee from Airports in India?
[A] Airport Authority of India
[B] Airports Economic Regulatory Authority
[C] Ministry of Civil Aviation
[D] Secretary , Ministry of Civil Aviation
Show Answer
Correct Answer: B [Airports Economic Regulatory Authority]
Notes:
The Airports Economic Regulatory Authority (AERA) Bill 2007 ensures that the watchdog monitors performance standards of airports and regulate tariff and other charges for aeronautical services including Airport
5. At which of the following places steam engines were originally manufactured by India Railway ?
[A] Varanasi
[B] Perambur
[C] Chittranjan
[D] Patiala
Show Answer
Correct Answer: C [Chittranjan]
Notes:
The first steam locomotive produced by Chittaranjan Locomotive Works (CLW) was dedicated to the nation on November 1, 1950. This significant event coincided with the renaming of the Loco Building Works as Chittaranjan Locomotive Works, in honor of the freedom fighter, leader, and statesman Deshbandhu Chittaranjan Das. The dedication ceremony was conducted by the first President of India, Dr. Rajendra Prasad. This marked an important milestone in the history of CLW, establishing it as a key manufacturer in India’s locomotive industry. The production of steam locomotives commenced earlier on January 26, 1950, and over the years, CLW evolved to become the largest locomotive manufacturer in the world.
6. Which combination can increase the deposit component of money supply?
[A] Increasing reserve requirements / decreasing volume of reserves
[B] Lowering reserve requirements / increasing volume of reserves
[C] Lowering reserve requirements / decreasing volume of reserves
[D] Increasing reserve requirements / increasing volume of reserves
Show Answer
Correct Answer: B [Lowering reserve requirements / increasing volume of reserves]
Notes:
The correct answer is “Lowering reserve requirements / increasing volume of reserves”, because lowering reserve requirements allows banks to lend a larger proportion of their deposits, thereby increasing the money multiplier, while increasing the volume of reserves gives banks more funds to create loans and deposits; together, these actions expand the deposit component of the money supply.
7. 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.
8. Reserve Tranche Position (RTP) is a term used in context with ____?
[A] Reserve Bank of India
[B] Federal Reserve Bank (of America)
[C] World Bank
[D] International Monetary Fund
Show Answer
Correct Answer: D [International Monetary Fund]
Notes:
Reserve Tranche Position (RTP) refers to a member country’s access to its quota in the International Monetary Fund (IMF). Each member can withdraw a portion of its quota without stringent conditions, known as the reserve tranche. This mechanism allows countries to access funds quickly during balance of payments crises. The RTP is crucial for maintaining liquidity in the global economy.
9. 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.
10. Which is India’s largest investor in the debt market?
[A] LIC of India
[B] ICICI Bank
[C] State Bank of India
[D] EPFO
Show Answer
Correct Answer: D [EPFO]
Notes:
EPFO, Employees’ Provident Fund Organisation, manages over Rs 28 lakh crore in assets as of 2023. EPFO allocates more than 89% of its portfolio to debt instruments. The organization invests in central and state government securities, State Development Loans, and corporate bonds. EPFO was established in 1952 under the Employees’ Provident Funds and Miscellaneous Provisions Act.