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. Highest percentage of nitrogen is found in which among the following fertilizers among the given options?
[A] Calcium ammonium nitrate
[B] Ammonium nitrate
[C] Calcium nitrate
[D] Urea
Show Answer
Correct Answer: D [Urea]
Notes:
The agricultural industry widely uses urea, a white crystalline solid containing 46 percent nitrogen as an animal feed additive and fertilizer. Urea has the highest nitrogen content of all solid fertilizers at 46% N.
2. In which of the following situations the “Investment” will increase?
[A] Increase in output and decrease in capital stock
[B] decrease in output and increase in capital stock
[C] Increase in output and increase in capital stock
[D] decrease in output and decrease in capital stock
Show Answer
Correct Answer: C [Increase in output and increase in capital stock]
Notes:
If the capital stock rises, the real interest rate falls. The fall in real interest rate will make the people to start saving more. It will also increase the investment. Increase in output by increasing productivity will also increase the capital and increase investment.
3. In context with the currency management in India the responsibility for coinage vests with which of the following?
[A] Government of India
[B] Reserve Bank of India
[C] Currency Chests
[D] Commercial Banks
Show Answer
Correct Answer: A [Government of India]
Notes:
Government of India on the basis of the Coinage Act, 1906
4. Who among the following was the chairman of the expert committee which suggested “Consumption Expenditure” for identifying the BPL?
[A] Abhijit Sen
[B] C Rangrajan
[C] Kirit Parikh
[D] Suresh Tendulkar
Show Answer
Correct Answer: D [Suresh Tendulkar]
Notes:
The correct answer is Suresh Tendulkar. He chaired the expert committee set up by the Planning Commission of India in 2009, which recommended using “Consumption Expenditure” as a criterion for identifying Below Poverty Line (BPL) households. This approach aimed to provide a more accurate assessment of poverty by focusing on actual consumption rather than income, reflecting the living standards of households. The Tendulkar Committee’s recommendations have importantly influenced India’s poverty measurement and policy formulation.
5. What do we call a situation, when the Government meets the gap of the public expenditure and public revenue by printing new currency?
[A] Fiscal Deficit
[B] Fiscal Stimulation
[C] Deficit Financing
[D] Differential accumulation
Show Answer
Correct Answer: C [Deficit Financing]
Notes:
When a government meets the gap between public expenditure and public revenue by printing new currency, it is called deficit financing. Deficit financing is the process of generating funds to cover the gap between expenditure and revenue.
6. Consider the following statements in context with the Cash Management Bills:
- Cash Management Bills are a kind of short term money market instruments with maturity less than 91 days
- Cash Management Bills are issued on discount
- Cash Management Bills are introduced only by Central Government
Which among the above statements is/ are correct?
[A] Only 1 is correct
[B] Only 1 & 2 are correct
[C] all are correct
[D] Only 2 & 3 are correct
Show Answer
Correct Answer: C [all are correct]
Notes:
The Government of India, in consultation with the Reserve Bank of India, finalized and introduced a new short-term instrument, known as Cash Management Bills, to meet the temporary cash flow mismatches of the Government. The Cash Management Bills are non-standard, discounted instruments issued for maturities less than 91 days and could be issued as and when need arises
7. Which of the following activities can help to reduce the government’s budget deficit?
- Implementation of Goods and Services Tax (GST)
- Rationalization of Subsidies
- Reduction in Income Tax
Select the correct option from codes given below:
[A] 1 & 2 Only
[B] 3 Only
[C] 2 & 3 Only
[D] 1, 2 & 3
Show Answer
Correct Answer: A [ 1 & 2 Only ]
Notes:
Implementation of Goods and Services Tax (GST) could help government raise tax revenues and reduce fiscal deficit. Fiscal deficit can be reduced by rationalizing subsidies in different sectors. Reduction in Income Tax will reduce government’s earnings and hence will increase budget deficit.
8. Which of these is used as promise from a bank to make a payment assuming certain conditions are met?
[A] Cash Credit
[B] Over Draft
[C] Letter of Credit
[D] Term Loan
Show Answer
Correct Answer: C [Letter of Credit]
Notes:
A letter of credit is a letter from a bank guaranteeing that a buyer’s payment to a seller will be received on time and for the correct amount.
9. At which rate, Reserve Bank of India borrows money from commercial banks?
[A] Bank Rate
[B] Repo Rate
[C] Reverse Repo Rate
[D] Statutory Liquidity Rate
Show Answer
Correct Answer: C [Reverse Repo Rate]
Notes:
Reverse repo rate is the rate at which the central bank of a country (Reserve Bank of India in case of India) borrows money from commercial banks within the country. It is a monetary policy instrument which can be used to control the money supply in the country.
10. Which of the following countries doesn’t matches to its famous tourist place?
[A] China – Great Wall of China
[B] Bhutan – Paro Taktsang
[C] Nepal – Pashupatinath Temple
[D] Sri Lanka – Padmanabhaswamy Temple
Show Answer
Correct Answer: D [Sri Lanka – Padmanabhaswamy Temple]
Notes:
Padmanabhaswamy Temple is located in Thiruvananthapuram, Kerala, India. The temple is built in an intricate fusion of the indigenous Kerala style and the Tamil style of architecture.
