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. The secondary market deals in which of the following?
[A] Only newly issued securities
[B] Only government bonds and certificates of deposit
[C] Securities already issued and previously traded
[D] Only short-term trading instruments
Show Answer
Correct Answer: C [Securities already issued and previously traded]
Notes:
The secondary market is for trading securities that have already been issued. Transactions involve investors buying and selling among themselves. The issuing company does not receive any funds from these trades. Major examples include stock exchanges like NYSE and NASDAQ. The market provides liquidity and facilitates price discovery for already existing securities including shares, bonds, and debentures.
2. SIDBI was established as a subsidiary of which institution in 1990?
[A] Industrial Investment Bank of India Ltd
[B] Industrial Finance Corporation of India
[C] Reserve Bank of India
[D] Industrial Development Bank of India
Show Answer
Correct Answer: D [Industrial Development Bank of India]
Notes:
SIDBI was established on April 2, 1990, as a wholly owned subsidiary of the Industrial Development Bank of India (IDBI) under an Act of Parliament. SIDBI acts as the principal financial institution for promoting, financing, and developing the Micro, Small, and Medium Enterprises (MSME) sector in India. SIDBI’s headquarters are in Lucknow, Uttar Pradesh.
3. Consider the following:
- Foreign Direct Investments
- Foreign Institutional Investments
- American Depository Receipts
- Global Depository Receipts
In the context of “Sources of Foreign Exchange Reserves,” which of the above are placed under Portfolio Investment?
[A] 2, 3 and 4
[B] 1, 2 and 3
[C] 1 and 4
[D] 1 only
Show Answer
Correct Answer: A [2, 3 and 4]
Notes:
Portfolio investments comprise financial assets such as stocks, bonds, and depository receipts. Foreign Institutional Investments (FII), American Depository Receipts (ADR), and Global Depository Receipts (GDR) are all considered portfolio investments because they do not confer direct control over the underlying asset or enterprise, whereas Foreign Direct Investments involve ownership and control, and are not part of portfolio investment.
4. Which statement is true about an equity fund?
[A] It guarantees fixed returns to investors
[B] It invests equally in debt and equity securities
[C] It invests mainly in stocks for long-term capital growth
[D] It assures predictable growth regardless of markets
Show Answer
Correct Answer: C [It invests mainly in stocks for long-term capital growth]
Notes:
An equity fund is a pooled investment scheme that invests predominantly in shares of companies. SEBI regulations in India require at least 65% of total assets in equities or equity-related instruments for classification as an equity fund. These funds seek long-term capital appreciation by investing in listed companies. Returns depend on market performance and Net Asset Value. Equity funds do not offer guaranteed or fixed returns.
5. 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.
6. The mosquito fern or Azolla is one of the most important bio fertilizers. In association with which among the following Azolla acts as a biofertilizer?
[A] Bacteria
[B] Blue-green algae
[C] Fungus
[D] Green algae
Show Answer
Correct Answer: B [ Blue-green algae]
Notes:
Bio-fertilizers such as Rhizobium, Azotobacter, Azospirillum and blue green algae (BGA) have been in use a long time. Anabaena, a blue green alga in association with water fern Azolla contributes nitrogen and also enriches soils with organic matter.
7. Which state ranked first in India’s 2019 ease of doing business assessment?
[A] Gujarat
[B] Uttar Pradesh
[C] Telangana
[D] Andhra Pradesh
Show Answer
Correct Answer: D [Andhra Pradesh]
Notes:
Andhra Pradesh secured the top position in the Business Reforms Action Plan (BRAP) 2019 assessment for ease of doing business in India. The assessment was conducted jointly by the Department for Promotion of Industry and Internal Trade and the World Bank. Andhra Pradesh implemented 100% of the reforms suggested under BRAP 2019. This ranking was released in September 2020.
8. Which of the following are used as tool for the Liquidity adjustment facility (LAF)?
- Repo Rate
- Reverse Repo Rate
- Cash Reserve Ratio
- Statutory liquidity ratio
Select the correct option from codes given below:
[A] 1 & 2 Only
[B] 3 & 4 Only
[C] 1, 2 & 3 Only
[D] 1, 2, 3 & 4
Show Answer
Correct Answer: A [ 1 & 2 Only ]
Notes:
Liquidity adjustment facility (LAF) is a monetary policy tool which allows banks to borrow money through repurchase agreements. It consists of Rep and Reverse Repo Rate.
9. Which Public Sector Giant issued world’s first Indian green masala bond?
[A] ONGC
[B] NTPC
[C] IOCL
[D] CIL
Show Answer
Correct Answer: B [NTPC]
Notes:
State-owned energy major National Thermal Power Corporation (NTPC) raised almost Rs 2,000 crores with the launch of its ‘Green Masala Bond’ on the London Stock Exchange (LSE). NTPC’s bond issue has been described as the first-ever Indian quasi-sovereign to issue a Masala Bond.
10. Which steel plant was not built during the 2nd Five Year Plan?
[A] Bhilai plant
[B] Salem plant
[C] Rourkela plant
[D] Durgapur plant
Show Answer
Correct Answer: B [Salem plant]
Notes:
Salem Steel Plant is located in Tamil Nadu. It was established in 1972 and commissioned in 1982. The Second Five Year Plan was from 1956 to 1961. Bhilai, Durgapur, and Rourkela steel plants were constructed during the Second Five Year Plan. Salem Steel Plant was not constructed during that period.
