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. Whose approval is enough to withdraw money from the Consolidated Fund of India?
[A] Only President
[B] Both Parliament and President
[C] Only Parliament
[D] Either Parliament or President
Show Answer
Correct Answer: C [Only Parliament]
Notes:
The Consolidated Fund of India was constituted under Article 266(1) of the Indian Constitution in 1950. Only after the enactment of an Appropriation Act by Parliament can funds be withdrawn from this Fund. The President of India cannot authorize withdrawal without parliamentary sanction. Expenditure from the Consolidated Fund includes government salaries, pensions, and all government-managed programs, all subject to prior parliamentary approval as stipulated in Article 114.
2. In which of the following countries, International Rice Research center is Located?
[A] Thailand
[B] Malaysia
[C] Philippines
[D] Indonesia
Show Answer
Correct Answer: C [Philippines]
Notes:
The International Rice Research Institute (IRRI) is headquartered in Philippines and has operating offices in seventeen countries. The Institute was originally established in the yeat 1960. It aims to reduce poverty and hunger, improve the health of rice farmers and consumers.
3. Which among the following plan document has a subtitle ” Inclusive growth” ?
[A] 10th Five year Plan
[B] 11th Five year Plan
[C] National Solar Mission
[D] Bhart Nirman
Show Answer
Correct Answer: B [11th Five year Plan]
Notes:
The correct answer is the 11th Five Year Plan. Launched in 2007, it emphasized “Inclusive Growth” to address poverty and inequality in India. This plan aimed to enhance social and economic development, focusing on sectors like education, health, and rural development. The 11th Plan set a target of 9% GDP growth, which indicates the importance of inclusive policies for sustainable development.
4. Which is the primary unit under the Lead Bank Scheme for banking infrastructure?
[A] Town
[B] Village
[C] District
[D] Block
Show Answer
Correct Answer: C [District]
Notes:
The Lead Bank Scheme was introduced by the Reserve Bank of India in 1969. The scheme adopted a district-based approach for banking infrastructure development. Under this scheme, each district is allocated to a commercial bank, called the Lead Bank for the district. The scheme covers all districts in India except certain metropolitan cities and Union Territories.
5. Which among the following phrases generally denotes National Income?
[A] Gross National Product at Market Prices
[B] Net National Product at Market Prices
[C] Gross National Product at Factor Cost
[D] Net National Product at Factor Cost
Show Answer
Correct Answer: D [Net National Product at Factor Cost]
Notes:
Net National Product at Factor Cost generally denotes National Income.
6. 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.
7. How many currencies are included in the BIS REER basket?
[A] 6
[B] 26
[C] 36
[D] 64
Show Answer
Correct Answer: D [64]
Notes:
The Bank for International Settlements (BIS) calculates the broad real effective exchange rate (REER) index using a basket of 64 currencies. The BIS methodology weights these currencies according to trade shares to reflect the competitiveness of a country in the global market. BIS also publishes narrower REER indices, like a 27-currency basket, but the broadest index uses 64 currencies.
8. From time to time, which among the following body publishes the “Exchange Control Manual” in context with the Foreign Exchange in India?
[A] Foreign Trade Promotion Board
[B] Department of Commerce
[C] Reserve Bank of India
[D] SEBI
Show Answer
Correct Answer: C [Reserve Bank of India]
Notes:
The correct answer is the Reserve Bank of India (RBI). The RBI is responsible for regulating foreign exchange in India under the Foreign Exchange Management Act (FEMA) of 1999. The “Exchange Control Manual” provides guidelines for foreign exchange transactions and is crucial for maintaining the stability of the Indian economy. The RBI also plays a key role in managing the country’s foreign exchange reserves and ensuring compliance with international financial regulations.
9. The power of banks to expand deposits through lending is called:
[A] Capital Expansion
[B] Credit Expansion
[C] Credit Control
[D] Credit Creation
Show Answer
Correct Answer: D [Credit Creation]
Notes:
Credit creation by commercial banks occurs under the fractional reserve system. Banks keep a part of deposits as reserves and lend the rest. This process increases the total supply of money. The cash reserve ratio (CRR) determines the amount banks must retain. The money multiplier is calculated as 1 divided by the CRR. New loans are redeposited and re-lent, multiplying deposits.
10. Which term refers to the maximum capital a company can raise in its lifetime?
[A] Authorized Capital
[B] Registered Capital
[C] Nominal Capital
[D] All of the above
Show Answer
Correct Answer: D [All of the above]
Notes:
Authorized capital is the maximum share capital stated in a company’s Memorandum of Association. Registered capital and nominal capital are alternate terms for authorized capital. This ceiling cannot be exceeded without shareholder approval and modification in company documents as per the Companies Act, 2013.
