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 RBI action is a qualitative credit control instrument?
[A] RBI increases Reverse Repo rate in quarterly policy review
[B] RBI decreases the CRR rate in quarterly policy review
[C] RBI decreases the Bank rate in quarterly policy review
[D] RBI announces selective credit control in quarterly policy review
Show Answer
Correct Answer: D [RBI announces selective credit control in quarterly policy review]
Notes:
Selective credit control is a qualitative instrument used by RBI to restrict or channel credit to specific sectors. RBI issues directives and margin requirements under the Banking Regulation Act, 1949. It was used for commodities such as foodgrains, sugar, and cotton. Selective credit control is distinguished from quantitative tools like CRR, SLR, bank rate, and repo rates, which affect the overall money supply.
2. Which combination can increase the deposit component of money supply?
[A] Increasing reserve requirements / decreasing volume of reserves
[B] Lowering reserve requirements / increasing volume of reserves
[C] Lowering reserve requirements / decreasing volume of reserves
[D] Increasing reserve requirements / increasing volume of reserves
Show Answer
Correct Answer: B [Lowering reserve requirements / increasing volume of reserves]
Notes:
The correct answer is “Lowering reserve requirements / increasing volume of reserves”, because lowering reserve requirements allows banks to lend a larger proportion of their deposits, thereby increasing the money multiplier, while increasing the volume of reserves gives banks more funds to create loans and deposits; together, these actions expand the deposit component of the money supply.
3. 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.
4. If the people prefer to keep cash with them rather than deposits, which among the following impacts will be seen on the Money Supply of the country?
[A] The money supply of the country will increase
[B] The money supply of the country will decrease
[C] The money supply of the country will not change
[D] The money supply of the country may increase or decrease
Show Answer
Correct Answer: B [The money supply of the country will decrease]
Notes:
If people prefer to keep cash with them rather than making deposits in banks, the impact on the Money Supply of the country will be as follows:
[B] The money supply of the country will decrease.
The reason for this is that money supply is typically categorized into different measures, with M1 and M2 being common examples. M1 includes currency (physical cash) in circulation and demand deposits (checking accounts). When people hold more cash and make fewer deposits, it reduces the amount of money in demand deposits, which are considered a part of the money supply. Therefore, if people choose to keep more cash on hand, it reduces the overall money supply in the country, leading to a decrease.
5. Which of the following took birth from the Marrakech Agreement?
[A] World Economic Forum
[B] World Trade organization
[C] OPEC
[D] G-20
Show Answer
Correct Answer: B [World Trade organization]
Notes:
The Marrakesh Agreement, manifested by the Marrakesh Declaration, was an agreement signed in Marrakesh, Morocco, by 123 nations on 15 April 1994, marking the culmination of the 8-year-long Uruguay Round and establishing the World Trade Organization, which officially came into being on 1 January 1995.
6. National Social Assistance programme was initially rolled out in which of the following five year plans?
[A] Fifth Five Year Plan
[B] Sixth Five Year Plan
[C] Seventh Five Year Plan
[D] Eighth Five Year Plan
Show Answer
Correct Answer: D [Eighth Five Year Plan]
Notes:
The National Social Assistance Programme was launched in 1995 during 8th five year plan as a Centrally Sponsored Scheme of the Government of India. The scheme provides financial assistance to the elderly, widows and persons with disabilities in the form of social pensions.
7. Which statement about India’s banking sector is incorrect?
[A] Foreign Banks are Scheduled Commercial Banks.
[B] Banks may set their Savings Deposit interest rates.
[C] Scheduled Banks get loans at RBI bank rate.
[D] Non-Scheduled Banks must keep cash reserve with RBI.
Show Answer
Correct Answer: D [Non-Scheduled Banks must keep cash reserve with RBI.]
Notes:
Non-Scheduled Commercial Banks are not required to keep their statutory cash reserves with the RBI. Scheduled Banks maintain the Cash Reserve Ratio (CRR) with the RBI. Non-Scheduled Banks may keep their reserves with themselves. The Banking Regulation Act, 1949, distinguishes Scheduled from Non-Scheduled Banks by inclusion in the Second Schedule of the RBI Act, 1934.
8. The term “Open Unemployment” is used when:
[A] people are not willing to work
[B] people are willing but not get work
[C] people leave their jobs in search of better ones
[D] people get the jobs but no regular payments
Show Answer
Correct Answer: B [ people are willing but not get work ]
Notes:
Open unemployment is a condition in which people have no work to do. They are able to work and are also willing to work but there is no work for them. They are found partly in villages, but very largely in cities. Most of them come from villages in search of jobs, many originate in cities themselves. Such employment can be seen and counted in terms of the number of such persons. Hence it is called open unemployment.
9. 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.
10. Which agency releases the Index of Industrial Production in India?
[A] Central Statistical Office
[B] National Statistics Office
[C] Ministry of Commerce and Industry
[D] Competition Commission of India
Show Answer
Correct Answer: B [National Statistics Office]
Notes:
The Index of Industrial Production is compiled and published monthly by the National Statistics Office. The National Statistics Office operates under the Ministry of Statistics and Programme Implementation. The responsibility for IIP preparation was transferred from the Central Statistical Office to the NSO. The IIP covers mining, manufacturing, and electricity sectors and is released six weeks after each reference month.
