Indian Economy MCQs

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Gresham’s law, enunciated by Sir Thomas Gresham, states that inferior currency (bad money) in circulation displaces valuable or superior currency (good money) if both are accepted at same face value, as people hoard the good currency and spend the bad.

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Selective credit control is a qualitative instrument used by RBI to restrict or channel credit to specific sectors. RBI issues directives and margin requirements under the Banking Regulation Act, 1949. It was used for commodities such as foodgrains, sugar, and cotton. Selective credit control is distinguished from quantitative tools like CRR, SLR, bank rate, and repo rates, which affect the overall money supply.

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Financial inclusion refers to providing banking and financial services to all sections of society. RBI and the Government use repo rate adjustments, open market operations, and changing CRR as monetary policy tools to manage money supply and inflation. Financial inclusion programs focus on expanding access, such as PMJDY launched in 2014, and do not directly affect inflation control.

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James Tobin proposed the Tobin tax in 1972 as a tax on international foreign exchange transactions. The proposal followed the end of dollar convertibility to gold and adoption of floating exchange rates. Tobin suggested tax rates between 0.1% and 1% on currency conversions. The original focus was specifically on foreign exchange markets to curb currency speculation and exchange-rate volatility.

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Authorized capital is the maximum share capital stated in a company’s Memorandum of Association. Registered capital and nominal capital are alternate terms for authorized capital. This ceiling cannot be exceeded without shareholder approval and modification in company documents as per the Companies Act, 2013.

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City Gas Distribution sector accounted for the highest consumption share of domestically produced natural gas in India as of FY2026. The CGD segment supplies households and sectors including CNG and PNG. Gas consumption by fertilizers, power, and refineries declined until FY2026. Government reports show CGD maintained demand growth, unlike other sectors. Policy measures support expansion in urban gas infrastructure since 2018.

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Tank irrigation is concentrated in South India, especially in Tamil Nadu, Andhra Pradesh, and Karnataka. South India receives irregular rainfall, making tank irrigation essential for water storage. Tank irrigation systems have existed in South India since ancient times, supported by regional rulers and local communities. The percentage of tank-irrigated area is highest in South Indian states compared to other regions of India.

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The Kudremukh Iron Ore Company Limited, formed in 1976 in Karnataka, transported mined ore via slurry pipeline to Panambur. Export operations used New Mangalore Port. Kudremukh mine ceased operations in 2006 after Supreme Court directive. KIOCL now exports pellets through Mangalore port. New Mangalore Port is a major port located in Karnataka on the Arabian Sea, operational since 1974.

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Direct marketing involves offering products or services directly to consumers without intermediaries. ATMs allow banks to interact directly with customers, promote products, and deliver messages through on-screen advertisements and printed receipts. Banks in India use ATMs for targeted promotions. Direct marketing differs from indirect and social marketing by focusing on direct communication with customers.

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The money market is a key component of the financial system. It is a market for short-term funds with maturity ranging from overnight to one year. The basic function of money market is to provide efficient liquidity position for commercial banks, financial institution, Mutual funds, insurance companies, corporate etc