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. When are stock market circuit breakers triggered?
[A] On special exchange-designated days
[B] When a new share trades for first time
[C] When trading volume of a stock exceeds a threshold
[D] When the S&P 500 Index falls by a set percentage
Show Answer
Correct Answer: D [When the S&P 500 Index falls by a set percentage]
Notes:
Market-wide circuit breakers in the United States are triggered if the S&P 500 Index falls by 7%, 13%, or 20% from the previous day’s closing value. Level 1 and Level 2 trigger 15-minute trading halts if before 3:25 p.m. A Level 3 decline causes trading to be halted for the remainder of the day. Circuit breakers were introduced in 1988 after the 1987 Black Monday crash.
2. In which year did the Balance of Payments (BOP) crisis occur in the Indian economy?
[A] 1990
[B] 1991
[C] 1995
[D] 1999
Show Answer
Correct Answer: B [1991]
Notes:
The Balance of Payments (BOP) crisis struck India in 1991. This triggered an economic crisis due to escalating oil prices, inflation and low foreign exchange reserves, which beleaguered India’s ability of import payments. Repercussions included severe rupee devaluation. The crisis incited economic liberalization, lowering of import tariffs and eased foreign exchange restrictions. With help from International Monetary Fund and other organizations, India managed to stabilize its situation, highlighting the necessity for constant economic overhauls to sustain financial equilibrium.
3. Which of the following is not a Selective Credit Control measure?
[A] Margin Requirements
[B] Regulation of Consumer Credit
[C] Rationing of Credit
[D] Open Market Operations
Show Answer
Correct Answer: D [Open Market Operations]
Notes:
Qualitative or selective methods of credit control refers to those methods which limit the nature or variety of money supply rather than its quantity. Such methods include regulation of margin requirement, credit rationing, regulation of consumer credit and direct action. Open Market Operations is a quantitative method of credit control.
4. Which among the following coal producer of India is outside the Coal India Ltd?
[A] Southern Eastern Coalfields (Bilaspur)
[B] Bharat Coking Coal (Dhanbad)
[C] Mahanandi Coalfields (Sambalpur)
[D] Singerani Collieries Company (Telangana)
Show Answer
Correct Answer: D [Singerani Collieries Company (Telangana)]
Notes:
Singareni Collieries Company Limited (SCCL) is jointly owned by the Government of Telangana and Government of India on a 51:49 equity basis.
5. Who is the Appellate Authority under RBI’s Integrated Ombudsman Scheme?
[A] Managing Director of the Concerned Bank
[B] Governor of Reserve Bank of India
[C] Deputy Governor of Reserve Bank of India
[D] Executive Director-in-charge of Consumer Education and Protection Department of RBI
Show Answer
Correct Answer: D [Executive Director-in-charge of Consumer Education and Protection Department of RBI]
Notes:
The Appellate Authority under the Integrated Ombudsman Scheme is the Executive Director-in-charge of the Consumer Education and Protection Department of RBI. This designation replaced the earlier Deputy Governor role in the 2021 updated scheme. Appeals must be submitted within 30 days of the Ombudsman decision. The scheme is governed by the Reserve Bank of India under the Banking Regulation Act, 1949.
6. Reserve Tranche Position (RTP) is a term used in context with ____?
[A] Reserve Bank of India
[B] Federal Reserve Bank (of America)
[C] World Bank
[D] International Monetary Fund
Show Answer
Correct Answer: D [International Monetary Fund]
Notes:
Reserve Tranche Position (RTP) refers to a member country’s access to its quota in the International Monetary Fund (IMF). Each member can withdraw a portion of its quota without stringent conditions, known as the reserve tranche. This mechanism allows countries to access funds quickly during balance of payments crises. The RTP is crucial for maintaining liquidity in the global economy.
7. Which among the following is NOT a money market instrument?
[A] Cash Management Bill
[B] Certificate of Deposit
[C] Commercial Paper
[D] Debenture
Show Answer
Correct Answer: D [ Debenture ]
Notes:
A debenture is a long-term debt instrument used by corporations and governments to raise capital, typically with a maturity of more than one year. In contrast, money market instruments, such as Cash Management Bills, Certificates of Deposit, and Commercial Papers, are short-term financial instruments with maturities of one year or less. Money market instruments are characterized by high liquidity and low risk, while debentures are considered capital market instruments.
8. Which was NOT a stipulated target in the FRBM Act, 2003?
[A] Elimination of revenue deficit
[B] Reduction of fiscal deficit to 3% of GDP
[C] Limiting government guarantees to 0.5% of GDP
[D] Complete elimination of primary deficit
Show Answer
Correct Answer: D [Complete elimination of primary deficit]
Notes:
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.
9. The expenditure done by the government on the MGNREGA scheme comes under the:
1. Revenue expenditure
2. Capital Expenditure
3. Planned Expenditure
4. Non Planned expenditure
Choose the correct option from the codes given below:
[A] Only 1 & 3
[B] Only 1, 2 & 3
[C] Only 1 & 4
[D] Only 1, 2 & 4
Show Answer
Correct Answer: B [ Only 1, 2 & 3 ]
Notes:
There are two different sets of classifications ‘revenue vs capital expenditure’ and ‘ plan vs non-plan.’
In general, expenditure used to create assets (building a road for instance) is capital expenditure while revenue expenditure consists of expenses such as salaries and other administrative costs. Plan expenditure covers money spent on schemes or projects run by different ministries under the five-year plans.
Schemes Such as the MG National Rural Employment Guarantee Scheme can have both revenue and capital components. For instance, the administrative costs of a plan scheme could be classified as revenue expenditure while the expenditure on the scheme itself (e.g. building a village road) might be capital expenditure. Non-plan expenditure consists of any expenditure by the government not covered by the five year plans. These include interest payments on government debt and expenditure on organs of the state such as the judiciary and the police.
10. The terms IBAN, BBAN, SEPA and SWIFT are associated with:
[A] International Banking
[B] Disaster Management
[C] Nuclear Waste Management
[D] International Maritime Boundaries
Show Answer
Correct Answer: A [ International Banking ]
Notes:
SWIFT stands for Society for Worldwide Interbank Financial Telecommunication. SEPA stands for Single Euro Payment Are. The aim of SEPA is to ensure that payments within Europe take place as simply and effectively as those within a single country. IBAN stands for the International Bank Account Number is a unique identifier helping banks process payments from person to person automatically. The IBAN contains all necessary information of the owner if a bank account such as the account number, bank and branch information and country code. BBAN is short for Basic Bank Account Number. It represents a country-specific bank account number.