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. Which among the following is a correct definition of Fiduciary Issue of notes?
[A] The issue of currency notes without metallic backing
[B] The issue of currency notes with metallic backing
[C] The issue of currency notes with partial metallic backing
[D] The issue of currency notes with proportional metallic backing
Show Answer
Correct Answer: A [The issue of currency notes without metallic backing]
Notes:
The fiduciary issue is the part of the issue of notes and coins that is not backed by gold. All notes are Fiduciary today.
2. Highest percentage of nitrogen is found in which among the following fertilizers among the given options?
[A] Calcium ammonium nitrate
[B] Ammonium nitrate
[C] Calcium nitrate
[D] Urea
Show Answer
Correct Answer: D [Urea]
Notes:
The agricultural industry widely uses urea, a white crystalline solid containing 46 percent nitrogen as an animal feed additive and fertilizer. Urea has the highest nitrogen content of all solid fertilizers at 46% N.
3. Who among the following declared the First Industrial Policy in the Post Independence Period?
[A] Jawahar lal Nehru
[B] Syama Prasad Mookerjee
[C] Bayya Suryanarayana Murthy
[D] Rafi Ahmed Kidwai
Show Answer
Correct Answer: B [Syama Prasad Mookerjee]
Notes:
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.
4. Which among the following does not come under the monetary policy for regulating the economy?
[A] Discount rate
[B] Government spending
[C] reserve requirement
[D] Open market Operations
Show Answer
Correct Answer: B [Government spending]
Notes:
Government spending refers to the money spent by the government or public sector on the acquisition of goods and services such as education, healthcare, social protection, defence etc. It does not come under monetary policy.
5. The government has responsibility to ensure availability of which among the following to all consumers regardless of their ability to pay price?
[A] Giffen Goods
[B] Supplementary Goods
[C] Merit Goods
[D] Complementary Goods
Show Answer
Correct Answer: C [Merit Goods]
Notes:
The correct answer is Merit Goods. Merit goods are products or services that the government believes are beneficial for individuals and society, and thus should be available to all, regardless of their ability to pay. Examples include education and healthcare. Governments often subsidize these goods to ensure equitable access, as they can lead to positive externalities, such as a more educated workforce and improved public health.
6. Bombay Plan was presented in which year?
[A] 1934
[B] 1940
[C] 1942
[D] 1944
Show Answer
Correct Answer: D [1944]
Notes:
In 1944 Eight Industrialists of Bombay including Mr. JRD Tata, GD Birla, Purshottamdas Thakurdas , Lala Shriram, kasturbhai lalbhai, AD Shroff , Ardeshir Dalal, & John Mathai working together prepared “A Brief Memorandum Outlining a Plan of Economic Development for India” which was popularly known as Bombay Plan. This plan envisaged doubling the per capita income in 15 years and tripling the national income during this period.
7. What is the primary reason for banks maintaining Margin Requirements?
[A] To fulfill Reserve Bank of India (RBI) requirements
[B] To comply with the Basel II Accord
[C] To maintain a buffer against the reduction in value of security
[D] To increase their profit margin
Show Answer
Correct Answer: C [To maintain a buffer against the reduction in value of security]
Notes:
Margin Requirements are primarily maintained by banks as a safety net against fluctuations in the value of securities. In case the value of security declines, banks have a backup to fall on. This system ensures financial stability and reduces the risk of potential losses. By having minimal levels of the margin, the bank insulates itself from drastic market downturns.
8. Economic Planning comes under which of the following lists ?
[A] Union List
[B] Concurrent list
[C] State List
[D] None of them
Show Answer
Correct Answer: B [Concurrent list]
Notes:
Economic planning is listed in the Concurrent List, or List III, of the Seventh Schedule of the Constitution of India. The Concurrent List is a list of 52 items that both the central and state governments can make laws on. The Concurrent List includes topics such as criminal law, marriage and divorce, bankruptcy, and economic and social planning.
9. Consider the following:
- Allotting of the shares of net proceeds of taxes
- Laying down principles governing grants in aid
- Looking into the financial relations between the central government and the state Governments
The above mentioned functions are carried out by which among the following?
[A] Cabinet Committee on Economic Affairs
[B] National Development Council
[C] Finance Commission
[D] NITI Aayog
Show Answer
Correct Answer: C [Finance Commission]
Notes:
The correct answer is the Finance Commission. The Finance Commission is a constitutional body established under Article 280 of the Indian Constitution. Its primary role is to recommend the distribution of tax revenues between the central and state governments, ensuring fiscal federalism. It also lays down principles for grants-in-aid to states, addressing financial relations between different levels of government. The Finance Commission is constituted every five years, and its recommendations are crucial for maintaining balanced economic development across states.
10. Consider the following:
- Reverse Repo Rate
- Cash Reserve Ratio
- Statutory Liquidity Ratio
- Bank Rate
An increase in which among the above could raise the interest rates in the market?
[A] 1
[B] 1 & 2
[C] 1, 2 & 3
[D] 1, 2, 3 & 4
Show Answer
Correct Answer: D [1, 2, 3 & 4]
Notes:
The Reserve Bank uses various policy levers, such as repo rate, reverse repo rate, cash reserve ratio, statutory liquidity ratio and bank rate, to influence the amount of money in the market. An increase in any one of these could raise the interest rates.
