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. Which is NOT an economic factor contributing to poverty in India?
[A] Caste-based social discrimination
[B] Low agricultural productivity
[C] Unemployment and underemployment
[D] Rapid population growth
Show Answer
Correct Answer: A [Caste-based social discrimination]
Notes:
Caste-based social discrimination in India is classified as a social, not economic, factor. The caste system leads to social exclusion and restricts access to education and jobs for marginalized groups such as Scheduled Castes and Scheduled Tribes. Social discrimination originates from traditional societal structures and legal history, rather than economic variables like production levels, employment rate, or population growth.
2. What is a key financial power of the World Bank?
[A] The right to set pegged currency parities
[B] The right to issue bonds for development loans
[C] The right to purchase gold below market rate
[D] All of the above
Show Answer
Correct Answer: B [The right to issue bonds for development loans]
Notes:
The World Bank has issued bonds in global markets since 1947. Bonds are issued in various currencies and formats, including domestic and Eurobonds. Funds raised through these bonds finance development loans and projects in member countries. The World Bank holds triple-A credit ratings by Moody’s and S&P. Over 180 member countries are eligible for World Bank development financing.
3. Consider the following:
- Short Term Funds
- Medium Term Funds
- Long Term Funds
Which among the above is/ are dealt in the Indian Capital Market?
[A] 1 & 2
[B] 2 & 3
[C] 1 & 3
[D] 1, 2 & 3
Show Answer
Correct Answer: B [2 & 3]
Notes:
Short Term Funds – Indian Money Market,
Medium and Long Term Funds- Indian Capital Market
4. Which among the following was not stipulated in the Fiscal Responsibility and Budget Management (FRBM) Act, 2003?
[A] Elimination of revenue deficit
[B] Elimination of primary deficit
[C] Non-borrowing by the Central Government from RBI except in certain situations
[D] Fixing government guarantees in any financial year as a percentage of GDP
Show Answer
Correct Answer: B [Elimination of primary deficit]
Notes:
The FRBM Act, 2003 was designed to promote fiscal discipline by laying down targets such as eliminating revenue deficit, reducing fiscal deficit, and restricting direct borrowing from the RBI except in specified situations. It also provided for monitoring of contingent liabilities and related fiscal parameters. However, it did not prescribe elimination of the primary deficit as a statutory target. Therefore, option 2 is the correct answer.
5. Why the Indirect taxes are termed regressive taxing mechanisms?
[A] They are charged at higher rates than direct taxes
[B] They are charged the same for all income groups
[C] They are not charged the same for all income groups
[D] ]None of the above is a correct reason
Show Answer
Correct Answer: B [They are charged the same for all income groups]
Notes:
The indirect taxes like VAT etc are paid by everyone if they buy any product irrespective of financial conditions. Direct taxing is considered the most progressive taxing mechanisms because they justify the income levels of the people
6. A transfer payment is a payment that is __:
[A] made by the government to its current workers
[B] made to people who are needy
[C] For in-kind services provided to the government
[D] For which no services or goods are rendered
Show Answer
Correct Answer: D [ For which no services or goods are rendered ]
Notes:
Transfer Payment is the payment exchanged for return of no goods or services. It generally describes the welfare expenditure of the government such as subsidies, pensions, grants etc.
7. Which steel plant was not built during the 2nd Five Year Plan?
[A] Bhilai plant
[B] Salem plant
[C] Rourkela plant
[D] Durgapur plant
Show Answer
Correct Answer: B [Salem plant]
Notes:
Salem Steel Plant is located in Tamil Nadu. It was established in 1972 and commissioned in 1982. The Second Five Year Plan was from 1956 to 1961. Bhilai, Durgapur, and Rourkela steel plants were constructed during the Second Five Year Plan. Salem Steel Plant was not constructed during that period.
8. Which among the following is a direct tax?
[A] Corporate tax
[B] Wealth tax
[C] Income tax
[D] All of the above
Show Answer
Correct Answer: D [All of the above]
Notes:
Direct tax is a government levy on the income, property, or wealth of people or companies. A direct tax is borne entirely by the entity that pays it, and cannot be passed on to another entity. Examples include corporation tax, income tax, and social security contributions.
9. Using iron instead of wooden ploughs is an example of which technology? (UPSC Prelims 1983)
[A] Obsolete technology
[B] Appropriate technology
[C] Redundant technology
[D] Ultimate technology
Show Answer
Correct Answer: B [Appropriate technology]
Notes:
Appropriate technology refers to methods or tools that are affordable, locally adaptable, and suited to the community’s needs. Iron ploughs replace less durable wooden ones, improving productivity and lifespan without requiring advanced infrastructure. The shift increases agricultural efficiency in areas with limited resources. This practice matches the concept of appropriate technology in rural agricultural settings.
10. If capital stock is everlasting, what is the depreciation rate? (UPSC Prelims 1991)
[A] Zero
[B] High
[C] Low
[D] Infinite
Show Answer
Correct Answer: A [Zero]
Notes:
Everlasting capital stock does not lose value or efficiency, so the depreciation rate is zero as no part decreases in utility or worth over time.
