Indian Economy MCQs

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Inflation reduces currency purchasing power and drives general price increases. Banks respond by raising loan prices due to higher costs, including increased wages and operational expenditures. Central banks often hike interest rates during inflation to control rising prices. Higher interest rates result in increased loan pricing by banks to maintain profit margins.

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CRISIL was the first credit rating agency in India, formed in the year1988. In 2005, it became a subsidiary of American company S&P Global. The highest credit risk rating awarded to any company is ‘AAA’ and the lowest is ‘D’.

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In the year 1948, India’s first Industrial Policy Resolution was adopted. This resolution defined the roles of government in development of industries in independent India. This policy determined that India would follow a mixed economy model having both public and private enterprises.

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In India’s money supply classification, M1 represents narrow money because it includes currency with the public, demand deposits and other highly liquid balances. M3 is known as broad money since it covers M1 plus time deposits held with banks and therefore reflects a wider measure of money in the economy. Hence, both statements are correct. This classification is widely used in banking and monetary policy analysis.

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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.

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The term Washington Consensus is commonly linked with policy ideas associated with institutions based in Washington, D.C., especially the International Monetary Fund, the World Bank, and the US Treasury Department. It is not usually associated with the World Trade Organization, which was created later and is not part of the original framework. Hence, statements 1, 2 and 4 are correct.

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The BSE SENSEX consists of 30 large, actively traded stocks. As of January 2026, BSE’s total market capitalization was approximately $5,001.331 billion. Historically, SENSEX 30 stocks account for around 30% of the BSE’s total market capitalization. The SENSEX was established in 1986 and is the primary benchmark index of the Bombay Stock Exchange.

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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.

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The World Bank Group consists of five institutions: IBRD, IDA, IFC, MIGA and ICSID. These bodies work on development finance, private-sector investment, investment guarantees and dispute settlement. UNCTAD, on the other hand, is a United Nations body that deals with trade, investment and development issues. Hence, UNCTAD is not included in the World Bank Group.

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Both statements are correct. The Global Hunger Index is published jointly by Concern Worldwide and Welthungerhilfe, with additional academic partners as of 2024. Its score is calculated using four indicators: undernourishment, child stunting, child wasting, and child mortality. Child stunting specifically refers to low height-for-age in children under five, reflecting chronic undernutrition.