Indian Economy MCQs

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The Reserve Bank of India (RBI) provides temporary loan facilities to the central and state governments. This loan facility is called Ways and Means Advances (WMA).

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The Multidimensional Poverty Index (MPI) was introduced in 2010 by UNDP and the Oxford Poverty and Human Development Initiative. It uses 10 indicators organized across three dimensions: health, education, and standard of living. These indicators include nutrition, child mortality, years of schooling, school attendance, cooking fuel, sanitation, drinking water, electricity, housing, and assets.

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During inflation, central banks often raise policy rates, causing banks to increase loan and deposit rates. Higher inflation causes nominal lending and deposit rates to be repriced upwards. In 2023, the Reserve Bank of India increased repo rates in response to inflation, leading to higher lending rates in the Indian banking sector.

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The correct answer is “Central Government.” In India, the Deputy Governors of the Reserve Bank of India (RBI) are appointed by the Central Government under Section 8 of the Reserve Bank of India Act, 1934. The RBI has four Deputy Governors, and their roles include overseeing various departments such as monetary policy, financial markets, and banking regulation. This appointment process reflects the government’s influence on the central bank’s operations.

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Short Term Funds – Indian Money Market,
Medium and Long Term Funds- Indian Capital Market

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Collateralized Borrowing and Lending Obligation (CBLO) is a money market instrument. It represents the terms and conditions of a loan between a borrower and a lender. CBLO is a short-term investment option that allows investors to earn interest on their excess funds. It also provides a source of short-term funding for borrowers.
CBLO is a discounted instrument that is available in electronic book entry form. The maturity period ranges from one day to one year.
CBLO is a low-risk instrument because it is adequately backed by collateral. It is also a short-term investment option, which means that investors can quickly liquidate their investment if needed.
CBLO is the largest overnight segment in India.

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Commercial Paper is issued as an unsecured promissory note. It was first introduced in India in 1990. CPs have maturities ranging from 7 days to 1 year. Only companies with a high credit rating can issue CPs. The Reserve Bank of India regulates CP issuance. CPs are used for short-term funding needs by corporate bodies, primary dealers, and financial institutions.

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The Revenue Neutral Rate is a property tax rate calculated so total tax revenue equals the previous year’s amount, based on current assessed property valuations. The formula is previous year’s tax revenue divided by current year’s assessed valuation, multiplied by 1,000. If property values increase, the RNR decreases to keep tax revenue flat.

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In 2025, India ranks second worldwide in cotton production, producing about 5.1 million tonnes. China ranks first with 7.5 million tonnes. India accounts for 20% of world cotton production and leads in total cotton cultivation area, covering 38% of the world’s cotton-growing land. The expected output for 2025-26 in India is around 23.5-24.5 million bales.

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In economics, the Lorenz curve is a graphical representation of the distribution of income or of wealth. It was developed by Max O. Lorenz in 1905 for representing inequality of the wealth distribution.