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 of the following is not a Selective Credit Control measure?
[A] Margin Requirements
[B] Regulation of Consumer Credit
[C] Rationing of Credit
[D] Open Market Operations
Show Answer
Correct Answer: D [Open Market Operations]
Notes:
Qualitative or selective methods of credit control refers to those methods which limit the nature or variety of money supply rather than its quantity. Such methods include regulation of margin requirement, credit rationing, regulation of consumer credit and direct action. Open Market Operations is a quantitative method of credit control.
2. 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.
3. International Rubber Study Group is located at?
[A] Kua La Lumpur
[B] Singapore
[C] Phnom Penh
[D] London
Show Answer
Correct Answer: B [Singapore]
Notes:
The headquarters of International Rubber Study Group are located in Singapore. It was established in 1944 in London but was relocated in Singapore in 2008.
4. The Consumer Welfare Fund is mainly financed through which source?
[A] Excise duty on manufactured goods
[B] Mandatory business contributions
[C] Unclaimed duty refunds and unused indirect tax
[D] Voluntary consumer donations
Show Answer
Correct Answer: C [Unclaimed duty refunds and unused indirect tax]
Notes:
The Consumer Welfare Fund was established under Section 57 of the CGST Act, 2017. Its main sources are unclaimed duty refunds under Central Excise and Customs Acts and unutilized indirect tax amounts not refundable to individuals. Receipts under GST, including unclaimed tax refunds, also finance the fund. The Department of Consumer Affairs administers the fund.
5. RBI applies the principle of reciprocity to which type of banks?
[A] Private Banks
[B] Foreign Banks
[C] Regional Rural Banks
[D] Urban Cooperative Banks
Show Answer
Correct Answer: B [Foreign Banks]
Notes:
The Reserve Bank of India applies the reciprocity principle to foreign banks operating in India. This allows foreign banks similar operating rights as Indian banks only if Indian banks receive comparable treatment in the respective foreign country. RBI norms on subsidiarization, updated in November 2013, emphasize this guideline for foreign banks. Indian-Singapore banking agreements in 2015 reflected application of this principle.
6. A rise in SENSEX in India indicates which of the following?
[A] There is a rise in the prices of shares of all companies registered with Bombay Stock exchange
[B] There is a rise in the prices of shares of all companies registered with National Stock Exchange
[C] There is an overall rise in the prices of a group of shares in BSE
[D] There is an overall rise in the prices of a group of shares in NSE
Show Answer
Correct Answer: C [ There is an overall rise in the prices of a group of shares in BSE ]
Notes:
A share market Index shows how a specified portfolio of share prices is moving in order to give an indication of market trends. The BSE SENSEX is a free-float market capitalization-weighted stock market index of 30 well-established and financially sound companies listed on Bombay Stock Exchange.
7. Consider the following with respect to the components of Internal Debt:
- Market Loans
- Treasury Bills
- Compensation and other bonds
- External loans from World Bank
Which of the above is/are included in the Internal Debt of India?
[A] Only 1 and 2
[B] Only 1, 2 and 3
[C] Only 2 and 3
[D] 1, 2, 3 and 4
Show Answer
Correct Answer: B [Only 1, 2 and 3]
Notes:
Internal debt includes borrowings by the government within the country, such as Market Loans, Treasury Bills, and Compensation and other bonds. External loans from the World Bank are categorized as external debt since they are sourced from outside the country. Thus, only 1, 2 and 3 are components of India's internal debt.
8. Who among the following advocated the adoption of ‘ PURA’ model to eradicate rural poverty?
[A] Dr. A.P.J. Abdul Kalam
[B] Sri Abhijit Sen
[C] Moulana Abdul Kalam Azad
[D] Prof. A.M. Patha
Show Answer
Correct Answer: A [Dr. A.P.J. Abdul Kalam]
Notes:
PURA model to eradicate rural poverty was advocated by Dr. A.P.J. Abdul Kalam, theformer president of India. In PURA model (Provision of urban amenities to rural areas) he discussed about the development of the rural development in India.
9. Custom duty is mainly an instrument of which policy?
[A] Monetary Policy
[B] Industrial Policy
[C] Foreign Trade Policy
[D] Fiscal Policy
Show Answer
Correct Answer: C [Foreign Trade Policy]
Notes:
Custom duty, also called customs duty, is levied on imports and exports to regulate international trade and protect domestic interests. Because it directly affects the flow and cost of goods across borders, it is primarily linked with foreign trade policy. It is also a source of government revenue, but its main policy role in this context is trade regulation rather than monetary or industrial control.
10. What is the minimum CRR rate that the RBI can prescribe for scheduled commercial banks under Section 42(1) of the RBI Act, 1934?
[A] No Limit
[B] 3%
[C] 4%
[D] 6%
Show Answer
Correct Answer: A [No Limit]
Notes:
Under Section 42(1) of the RBI Act, 1934, the Reserve Bank of India may prescribe the Cash Reserve Ratio for scheduled commercial banks without any statutory floor or ceiling. In other words, the law does not fix a minimum or maximum CRR rate. The actual CRR notified by RBI can change from time to time through its circulars and directions, but the enabling provision itself leaves the rate open-ended.
