Indian Economy MCQs

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The Balance of International payments or Balance of Payments refers to the systematic and summary record of a country’s economic and financial transactions with the rest of the world, over a period of time.
The three main components of BoP are Current Account, Capital Account and Official Reserve Transactions

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The Fourth Five-year plan was implemented during 1969 to 1974 in India. The plan has twin objectives of “Growth with stability” and “progressive achievement of self-reliance”. It focused on the growth rate of Agriculture.

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In the year 1924, the practice of presenting the railway budget separately from the general budget (or vice versa in true sense) started in India.

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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.

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The correct answer is “Broad Money.” M3 is a measure of the total money supply in an economy, including cash, demand deposits, and easily convertible near money. It encompasses all liquid and near-liquid assets, making it a comprehensive indicator of money available for spending and investment. M3 is often used by central banks to gauge economic health and inform monetary policy.

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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.

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Under the Reserve Bank – Integrated Ombudsman Scheme, 2021, the Executive Director in charge of the Consumer Education and Protection Department of RBI is the appellate authority for appeals against Banking Ombudsman decisions. Appeals must be filed within 30 days through the RBI portal or email. Previous schemes listed the Deputy Governor, but the current scheme specifies the Executive Director.

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Keynes and E. F. Schumacher proposed the Bancor as a supranational currency between 1940–1942. The International Clearing Union was suggested to manage its use in global trade. The Bancor proposal was presented by the United Kingdom at the Bretton Woods Conference in 1944. The concept was intended to prevent persistent surpluses or deficits among countries. The Bancor was not adopted; instead, the U.S. dollar was chosen as the main reserve currency.

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Interest Rate Risk falls under Market Risk. Market risk encompasses the potential for financial loss due to fluctuations in market prices, including interest rates. Interest rate changes can affect the value of investments, particularly fixed-income securities. For example, when interest rates rise, the prices of existing bonds typically fall, leading to potential losses for investors. This risk is a critical consideration for financial institutions and investors alike.

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The FRBM Act, 2003 mandated elimination of revenue deficit, reduction of fiscal deficit to 3% of GDP, and limitation of government guarantees. The Act did not stipulate complete elimination of the primary deficit as a statutory target. The focus was on fiscal and revenue deficit reduction. The 2018 amendment revised several targets but did not mandate elimination of the primary deficit as a statutory requirement.