Indian Economy MCQs

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Transfer payments made by the Government including subsidies, government aid, social security assistance such as health insurance payment and scholarship are not included in the national income. Because they do not represent any economic activity.

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World Bank is one of five institutions created at the Breton Woods Conference in 1944. World Bank is part of the United Nations system, but its governance structure is different. World Bank’s headquarter is situated at Washington DC.

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The tertiary (services) sector is the largest contributor to India’s GDP in FY26, with a share of 56.4% in Gross Value Added, according to the First Advance Estimates. The services sector grew by 9.1% in FY26.

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A competitive firm maximizes its profit when its marginal revenue equals its marginal cost. Marginal revenue is the additional revenue earned by the firm from selling an additional unit of output. When marginal revenue equals marginal cost, the firm is earning the maximum possible profit.  The marginal cost of production and marginal revenues are two determinants used to analyze the profitability of the production. When the marginal cost is below the marginal revenue, the firm can increase its revenue by producing more.  When a competitive firm maximizes profit, profits are always greater than 0.

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Road and railways are economic overheads as they provide essential infrastructure for transportation and movement of goods, stimulating economic activity. Hospitals, schools, and sanitation are social overheads, catering mainly to health, education, and hygiene rather than direct economic productivity.

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Financial inclusion refers to providing banking and financial services to all sections of society. RBI and the Government use repo rate adjustments, open market operations, and changing CRR as monetary policy tools to manage money supply and inflation. Financial inclusion programs focus on expanding access, such as PMJDY launched in 2014, and do not directly affect inflation control.

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The Multidimensional Poverty Index (MPI) was introduced in 2010 by UNDP and the Oxford Poverty and Human Development Initiative. It uses 10 indicators organized across three dimensions: health, education, and standard of living. These indicators include nutrition, child mortality, years of schooling, school attendance, cooking fuel, sanitation, drinking water, electricity, housing, and assets.

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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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Fixed to Floating and Floating to Floating describe interest rate swaps, which are derivative contracts exchanging fixed and floating interest payments. Interest rate swaps, including vanilla and basis swaps, are widely used for hedging and managing interest rate risk. Basis swaps exchange floating rates based on different benchmarks. These swaps play a major role in global financial markets and are commonly used by banks and corporations.

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An equity fund is a pooled investment scheme that invests predominantly in shares of companies. SEBI regulations in India require at least 65% of total assets in equities or equity-related instruments for classification as an equity fund. These funds seek long-term capital appreciation by investing in listed companies. Returns depend on market performance and Net Asset Value. Equity funds do not offer guaranteed or fixed returns.