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. Who among the following is called father of Economics?
[A] David Hume
[B] Lamarck
[C] Adam Smith
[D] John Stuart Mill
Show Answer
Correct Answer: C [Adam Smith]
Notes:
Adam smith is considered as father of Modern Economics. In his book “The nature & causes of wealth of the Nation’s 1776, he has described economics as science of wealth. According to him economy is the study of wealth only and it deals with its production and consumption. Only material goods which are scarce and useful are wealth.
2. If the demand and supply of a commodity increase by an equal absolute amount, what will be the effect on market price?
[A] Increase
[B] Decrease
[C] Remain Stable
[D] First decrease then increase
Show Answer
Correct Answer: C [Remain Stable]
Notes:
When the market is in equilibrium, and when the demand and supply of a commodity increase by an equal absolute amount, the market price will not increase, rather it will remain stable.
3. Who among the following scholars is associated with Law of Rent?
[A] Richard Jones
[B] Thomas Robert Malthus
[C] David Ricardo
[D] Adam Smith
Show Answer
Correct Answer: C [David Ricardo]
Notes:
David Ricardo, an English classical economist, developed the law of rent in 1809. He presented the law in his book On the Principles of Political Economy and Taxation in 1821.
Ricardo’s theory defined rent as the portion of the earth’s produce that is paid to the landlord for the original and indestructible powers of the soil. In other words, rent is the price paid for the use of land.
Ricardo developed his theory to explain the origin and nature of economic rent. He used the economy and rent to analyze the large rise in corn and land prices during the Napoleonic wars (1805-1815).
The term “Ricardian rent” comes from Ricardo’s theory.
4. Which among the following body in India requires to protect the interests of consumers against anti-competitive practices of all market entities?
[A] National Consumer Forum
[B] Competition Commission of India
[C] National Consumer Disputes Redressal Commission
[D] Central Vigilance Commission
Show Answer
Correct Answer: B [Competition Commission of India]
Notes:
The Competition Commission of India (CCI) was set up to replace the anachronistic Monopolies and Restrictive Trade Practices Commission (MRTPC). It was established to eliminate practices that adversely affect competition in different industries/areas and protect interests of consumers and ensure freedom of trade. The Competition Act of 2002 called for the creation of CCI. However, it was established in 2003 and became fully functional only by 2009. The CCI is a quasi-judicial body which gives opinions to statutory authorities and also deals with other cases. It has one chairman and six members. It is the youngest and the only cross-sector regulator in India.
5. 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.
6. What type of account is Union Bank’s US dollar account with Citibank, New York?
[A] VOSTRO account
[B] NOSTRO account
[C] LORO account
[D] Mirror Nostro account
Show Answer
Correct Answer: B [NOSTRO account]
Notes:
A NOSTRO account is a bank account that a domestic bank holds in a foreign country in the currency of that country. The term is derived from the Latin word meaning “ours.” For Union Bank of India, holding an account with Citibank in New York in US dollars constitutes a NOSTRO account. Such accounts are used for international transactions and settlements.
7. The trade of Nylon Fibers in India is governed by which ministry?
[A] Ministry of Textiles
[B] Ministry of Chemicals and Fertilizers
[C] Ministry of Petroleum
[D] Ministry of Commerce
Show Answer
Correct Answer: B [Ministry of Chemicals and Fertilizers]
Notes:
Nylon fiber is a synthetic polymer regulated under petrochemicals. The Department of Chemicals and Petrochemicals operates under the Ministry of Chemicals and Fertilizers. The ministry monitors petrochemicals and synthetic fiber industries in India. This ministry administers policies, development, and regulation of nylon production and trade. The department was previously under the Ministry of Petroleum until 1991, then reassigned.
8. UDYAMI helpline is for?
[A] Large capital Industries
[B] Female entrepreneur
[C] Farmers introducing technology in Farming
[D] Micro, small & medium size enterprises
Show Answer
Correct Answer: D [Micro, small & medium size enterprises]
Notes:
Udyami Helpline with number 1800 180 6763 is a Call Centre of Ministry of Micro, Small and Medium Enterprises (MSME), Government of India. It was launched in 2010 to work as a single point facility for MSMEs needing different kinds of information and accessibility of Banks and other MSME-related organisations.
9. Which is the most volatile form of foreign capital?
[A] External Commercial Borrowings
[B] Foreign Direct Investment
[C] Loans from International Financial Institutions
[D] Foreign Portfolio Investment
Show Answer
Correct Answer: D [Foreign Portfolio Investment]
Notes:
Foreign Portfolio Investment refers to investments in securities like stocks and bonds by foreign investors. FPI is highly liquid and can be withdrawn quickly. FPI inflows and outflows are sensitive to global and domestic financial conditions. Sudden withdrawal of FPI causes market volatility. FPI is termed “hot money” compared to FDI, which involves long-term capital commitments. FPI contributed to major capital outflows during financial crises.
10. Which body decides the allocation of tax shares between Union and States?
[A] Parliament
[B] Finance Commission
[C] Ministry of Finance
[D] Public Accounts Committee
Show Answer
Correct Answer: A [Parliament]
Notes:
Parliament decides the allocation of tax shares between Union and States as per Articles 270 and 272 of the Constitution. Parliament enacts laws based on recommendations from the Finance Commission, such as the 16th Finance Commission’s recommendation of a 41% share to States for 2026–31. The Ministry of Finance implements these decisions after they are legislated by Parliament.