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. Who among the following is called father of Economics?
[A] David Hume
[B] Lamarck
[C] Adam Smith
[D] John Stuart Mill
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Correct Answer: C [Adam Smith]
Notes:
Adam smith is considered as father of Modern Economics. In his book “The nature & causes of wealth of the Nation’s 1776, he has described economics as science of wealth. According to him economy is the study of wealth only and it deals with its production and consumption. Only material goods which are scarce and useful are wealth.
3. Which of the following is a suitable term for steady rise in the general level of prices, income, output and employment?
[A] Boom
[B] Recession
[C] Depression
[D] Recovery
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Correct Answer: D [Recovery]
Notes:
The phase that is commonly used to describe a steady rise in the general level of prices, income, output, and employment is economic recovery.
4. A number of factors are responsible for poverty in India. Which among the following is not the economic factor contributing to poverty?
[A] Inequalities of Income
[B] Mass illiteracy
[C] Low productivity in Agriculture
[D] Fast Rise in Population
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Correct Answer: A [Inequalities of Income]
Notes:
Income inequality is a measure of how unevenly income is distributed throughout a population in a region. Illiteracy, Low Agriculture productivity and faster population growth are the main economic factors contributing to poverty.
5. What is the main motive of the government behind having a dual price system & setting up of fair price shops?
[A] To demote speculation and hoarding
[B] To incentivise the trading of essential commodities
[C] To eliminate the monopoly of the traders and speculators
[D] To make the essential commodities available to the weaker sections of the society
Show Answer
Correct Answer: D [To make the essential commodities available to the weaker sections of the society]
Notes:
The main motive of the government behind setting up fair price shops is to provide essential commodities to people living below the poverty line. The government buys commodities from farmers at their desirable prices and sells them through fair price shops at half price. This allows people who are unable to buy things from the market due to high prices to purchase necessary products.
Fair price shops are also known as ration shops. Any family with a ration card can purchase a stipulated amount of food grains, sugar, kerosene, etc..
Dual pricing, also known as dynamic pricing or surge pricing, is a pricing strategy in which a business charges different prices for the same product or service based on factors such as demand, inventory levels, or weather conditions. The purpose of dual pricing is to drive other competitors out of the business in order to dominate a product niche or even an entire industry.
6. Which among the following is referred to as 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 “Soft Loan Window” of the World Bank is commonly referred to as the International Development Association (IDA). It was founded in 1960 and provides low or zero-interest loans and grants to the world’s poorest countries. These “soft” loan terms allow for improved economic development and poverty reduction. Unlike the World Bank, the IDA seeks to reduce poverty by providing loans to developing countries for programs that are intended to boost economic growth and improve living conditions.
7. Who among the following will be benefited by Deflation?
[A] Salary Earners
[B] pensioners
[C] Equity Holders
[D] Debtors
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Correct Answer: A [Salary Earners]
Notes:
Deflation benefits salary earners because it increases the purchasing power of money. When prices fall, the real value of wages rises, allowing consumers to buy more with the same income. In contrast, pensioners may suffer if their fixed incomes do not adjust for deflation, equity holders may see asset values decline, and debtors face higher real debt burdens. Historically, deflation has been linked to economic downturns, such as the Great Depression, where falling prices led to reduced consumer spending.
8. Which of the following Government gets the stamp duty collected on promissory notes?
[A] State Government 100%
[B] Central Government 100 %
[C] State Government 50% and Central Government 50%
[D] State Government 25% and Central Government 75%
Show Answer
Correct Answer: A [State Government 100%]
Notes:
The correct answer is “State Government 100%.” In India, stamp duty on promissory notes is governed by the Stamp Act of 1899, which allows state governments to levy stamp duty. Each state has the authority to set its own rates, and the revenue collected from stamp duty is retained entirely by the state government. This is a important source of revenue for states, contributing to their financial resources for development and public services.
9. The minimum interest rate of a bank below which it is not viable to lend, is known as ____:
[A] Reserved Rate
[B] Base Rate
[C] Marginal Rate
[D] Prime Lending Rate
Show Answer
Correct Answer: B [Base Rate]
Notes:
The correct answer is “Base Rate.” The Base Rate is the minimum interest rate set by a bank for lending to its customers. It serves as a benchmark for various loans and is influenced by factors like the central bank’s policy rate and the bank’s cost of funds. The Base Rate ensures that banks cover their costs and maintain profitability while lending. In many countries, including India, the Base Rate is a crucial component of monetary policy and financial stability.
10. A person reaches the Bank with a Demand Draft payable to his account. At this situation, the Bank works as which of the following?
[A] Creditor
[B] Debtor
[C] Beneficiary
[D] Trustee
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Correct Answer: D [ Trustee ]
Notes:
The bank act as a trustee to the person as the person is withdrawing his own money; he is neither taking loan nor depositing money for fixed duration to bank, for him to be debtor or creditor.