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. Export of which of the following is an Invisible Export?
[A] Services
[B] Prohibited goods
[C] Unrecorded goods
[D] Goods through smuggling
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Correct Answer: A [ Services ]
Notes:
Any export that does not have a tangible physical presence (e.g. expertise, insurance underwriting). Here, Invisible Export means export of Services
2. What is the Bank Rate in relation to RBI and commercial banks?
[A] RBI lends long-term loans to banks without requiring collateral or repurchase agreement
[B] RBI lends short-term loans to banks with government securities as collateral
[C] Commercial banks lend to customers
[D] Banks borrow overnight funds from RBI
Show Answer
Correct Answer: A [RBI lends long-term loans to banks without requiring collateral or repurchase agreement]
Notes:
The Bank Rate is the interest rate at which the Reserve Bank of India lends long-term funds to commercial banks without any collateral or repurchase agreement. The RBI notifies the Bank Rate, and it is generally above the Repo Rate. The Bank Rate has been used by RBI since the Reserve Bank of India Act, 1934, to manage liquidity and regulate money supply.
3. 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
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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.
4. World Bank Headquarters located at:
[A] Switzerland
[B] Washington DC
[C] New York
[D] Paris
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Correct Answer: B [Washington DC]
Notes:
World Bank is one of five institutions created at the Breton Woods Conference in 1944. World Bank is part of the United Nations system, but its governance structure is different. World Bank’s headquarter is situated at Washington DC.
5. Which goods are consumed collectively by the community?
[A] Public Goods
[B] Consumer Goods
[C] Non-durable Goods
[D] Durable Goods
Show Answer
Correct Answer: A [Public Goods]
Notes:
Public goods are non-excludable and non-rivalrous commodities or services. They are made available to all members of society without direct payment. Examples include national defense, clean air, and street lighting. Governments usually fund public goods due to the free rider problem. Paul Samuelson formally defined public goods in 1954. Provision and maintenance typically rely on taxation and government administration.
6. In which year, the practice of presenting the railway budget separate from the general budget (or vice versa in true sense) started in India?
[A] 1920
[B] 1924
[C] 1925
[D] 1930
Show Answer
Correct Answer: B [1924]
Notes:
In the year 1924, the practice of presenting the railway budget separately from the general budget (or vice versa in true sense) started in India.
7. Which is called the “Soft Loan Window” of the World Bank?
[A] International Monetary Fund
[B] International Finance Corporation
[C] International Development Association
[D] World Trade Organization
Show Answer
Correct Answer: C [International Development Association]
Notes:
The International Development Association (IDA) was established in 1960 as part of the World Bank Group. IDA offers highly concessional loans and grants to the world’s poorest countries. As of fiscal year 2025, IDA has provided $600 billion to 116 countries. Its concessional loans typically have repayment periods of up to 40 years with long grace periods and low or zero interest.
8. Which among the following measures for controlling inflation can be taken by the Reserve Bank of India but not by the Government of India?
[A] Implementing progressive taxation policies
[B] Adjusting public sector expenditure budgets
[C] Credit rationing to limit money supply
[D] Regulating foreign direct investment flows
Show Answer
Correct Answer: C [Credit rationing to limit money supply]
Notes:
The Reserve Bank of India can use credit rationing to limit money supply. Credit rationing is a monetary policy tool of RBI. Progressive taxation and public sector expenditure are managed by the Government of India as fiscal policy. Regulation of foreign direct investment flows is also executed by the government. RBI and government use separate policy instruments for inflation control.
9. Which is classified as an economic overhead?
[A] Hospitals
[B] Schools
[C] Sanitation facilities
[D] Road and Railways
Show Answer
Correct Answer: D [Road and Railways]
Notes:
Road and railways are economic overheads as they provide essential infrastructure for transportation and movement of goods, stimulating economic activity. Hospitals, schools, and sanitation are social overheads, catering mainly to health, education, and hygiene rather than direct economic productivity.
10. 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.
