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 Indian state is the top producer of large cardamom?
[A] Kerala
[B] Sikkim
[C] Assam
[D] Gujarat
Show Answer
Correct Answer: B [Sikkim]
Notes:
Sikkim produces about 80% of India’s large cardamom. It is grown mainly in the Himalayan region of Sikkim due to the favorable climate and altitude. Sikkim’s production reached approximately 5.591 thousand tonnes in 2025. The government initiative “Mero Alaichi, Mero Dhan” supports cardamom cultivation in Sikkim. Assam, Gujarat, and Kerala do not match Sikkim’s output in this crop.
2. Which option is an example of Green Field Investment?
[A] Investment in agriculture land for future development
[B] Investment in a new factory complex on undeveloped land
[C] Cleaning and converting an old cement factory to commercial use
[D] Cleaning and converting an old cement factory to residential use
Show Answer
Correct Answer: B [Investment in a new factory complex on undeveloped land]
Notes:
Green Field Investment refers to setting up a new facility on previously undeveloped land. The term is commonly used in foreign direct investment when a parent company builds its operations in a foreign country from scratch. Such investments involve construction of new plants, buildings, and infrastructure, often in areas where no prior facilities exist. This is distinct from Brown Field Investment, which involves modifying or upgrading an existing facility.
3. A good that is non-rivalries and non-excludable, and whose benefits can not be prices and therefore to which the principle of exclusion does not apply comes under the following heading?
[A] Pure Private Goods
[B] Pure Public Goods
[C] Pure Free Goods
[D] Pure Market Goods
Show Answer
Correct Answer: B [Pure Public Goods]
Notes:
Pure public goods are goods or services that are both non-excludable and non-rivalrous in consumption. Non-excludable means that it is impossible to prevent anyone from using the good or service, once it is provided. Non-rivalrous means that one person’s use of the good or service does not diminish its availability to others. Examples of pure public goods include national defense, clean air, and knowledge. Because pure public goods are both non-excludable and non-rivalrous, they are often provided by the government, since it is difficult for private businesses to exclude people from using them or to charge them for their use.
4. Which among the following will not be an entry in the Profit and Loss account of a bank ?
[A] Interest expense on deposits
[B] Interest earned on advances.
[C] Profit/loss on sale of assets
[D] Income from investment banking related activities
Show Answer
Correct Answer: C [Profit/loss on sale of assets]
Notes:
Profit/loss on sale of assets is an entry in the manufacturing company` s P & L account under the heading other income. In banks the other income includes income from distribution of financial products, income from investment banking related activities, treasury gains and other fee incomes
5. Who among the following was the architect of second five year plan ?
[A] Jawahar Lal Nehru
[B] C D Deshmukh
[C] P C Mahalanobis
[D] Subimal Datt
Show Answer
Correct Answer: C [P C Mahalanobis]
Notes:
Prasantha Chandra Mahalanobis or P. C. Mahalanobis (1893-1972) was the first Indian statistician to receive world recognition. In 1933, Mahalanobis founded the first Indian statistical journal Sankhya, along the lines of Biometrika, which had inspired him greatly. He was architect of India’s second five year plan and due to this second plan is known as Mahalanobis model.
6. Which body recommends Minimum Support Prices to the Government of India?
[A] Ministry of Agriculture and Farmers Welfare
[B] Cabinet Committee on Economic Affairs
[C] State Governments
[D] Commission for Agricultural Costs and Prices (CACP)
Show Answer
Correct Answer: D [Commission for Agricultural Costs and Prices (CACP)]
Notes:
The Commission for Agricultural Costs and Prices (CACP) was established in January 1965 as the Agricultural Prices Commission and renamed CACP in 1985. CACP functions as an attached office under the Ministry of Agriculture and Farmers Welfare. CACP annually recommends MSPs for 22-23 crops to the government. Its recommendations consider factors such as production costs, market prices, and inter-crop price parity.
7. Consider the following statements:
- The Market Stabilization Scheme provides for issue of Treasury Bills and/or dated securities by the Government in addition to their normal market borrowing programme up to an annual aggregate ceiling.
- The money raised in Market Stabilization Fund is kept in the MSS Account as a part of Consolidated Fund of India
- The auditing of the MSS Fund is done by Comptroller and Auditor General of India
Which among the above statements is / are correct?
[A] Only 1 is correct
[B] Only 1 & 2 are correct
[C] 1, 2 & 3 are correct
[D] Only 1 & 3 are correct
Show Answer
Correct Answer: A [Only 1 is correct]
Notes:
The correct answer is “Only 1 is correct.” Explanation: 1. The Market Stabilization Scheme (MSS) allows the government to issue Treasury Bills and dated securities to manage liquidity, but it does not involve a separate borrowing program beyond the normal limits. 2. The money raised under the MSS is not kept in the MSS Account as part of the Consolidated Fund of India. instead, it is maintained in a separate account. 3. While the Comptroller and Auditor General of India (CAG) audits government accounts, the MSS Fund itself is not specifically audited by the CAG. Trivia Fact: The MSS was introduced in 2004 to help the Reserve Bank of India manage excess liquidity in the economy, particularly during periods of high capital inflows.
8. What does “round tripping” in FDI refer to?
[A] The use of FDI to set up subsidiaries worldwide
[B] Domestic capital routed abroad and reinvested as foreign investment
[C] Repatriation of FDI profits to the investor’s home country
[D] Cross-border flows through free trade zones without taxes
Show Answer
Correct Answer: B [Domestic capital routed abroad and reinvested as foreign investment]
Notes:
Round tripping in FDI involves domestic capital sent to foreign jurisdictions and then returning as foreign investment. Such investments often use offshore financial centers or low-tax countries. This mechanism enables companies to claim incentives for foreign investors. It led to significant FDI inflows for countries such as India and China through countries like Mauritius and Hong Kong via special purpose vehicles.
9. Who are eligible beneficiaries of the Reverse Mortgage Scheme?
[A] Government Employees
[B] Senior Citizens aged 60 years and above
[C] Unemployed Persons
[D] Working Professionals below 55 years
Show Answer
Correct Answer: B [Senior Citizens aged 60 years and above]
Notes:
The Reverse Mortgage Scheme in India was launched in 2007. The scheme targets senior citizens aged 60 years and above as beneficiaries. Joint borrowers may apply if at least one applicant is aged 60 years and the other not below 55 years. The scheme allows senior homeowners to mortgage property for regular payments from lenders. Ownership remains with the borrower during the loan tenure.
10. Who regulates interest rates on savings bank accounts in India?
[A] Not regulated
[B] Regulated by Central Government
[C] Regulated by RBI
[D] Regulated by State Governments
Show Answer
Correct Answer: C [Regulated by RBI]
Notes:
Reserve Bank of India (RBI) regulates savings bank account interest rates. Since October 2011, RBI deregulated these rates, letting banks set their own rates but still directing certain calculation and crediting methods. RBI issues guidelines for frequency of interest payments and storage of balances. RBI operates under the Reserve Bank of India Act, 1934 and directions updated periodically for banking operations.
