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. Agricultural Income Tax revenue goes to which of the following governments in India?
[A] State Governments
[B] Central Government
[C] Collected by State Governments , delivered to Central Government
[D] Collected by Central Government, delivered to State Governments
Show Answer
Correct Answer: A [State Governments]
Notes:
The taxing powers of the central government encompass taxes on income (except agricultural income), excise on goods produced (other than alcohol), customs duties, and inter-state sale of goods.
The state governments are vested with the power to tax agricultural income, land and buildings, sale of goods (other than inter-state), and excise on alcohol. Local authorities such as Panchayat and Municipality also have power to levy some minor taxes.
2. Which among the following is considered to be the best measure of an increase in a country’s economic efficiency?
[A] Increase in annual private investment
[B] Increase in real national income
[C] Increase in real per capita income
[D] Increase in net annual investment
Show Answer
Correct Answer: C [Increase in real per capita income]
Notes:
Per capita income is a measure of the average income earned per person in a given area (usually in a country) in a particular year. When this figure is adjusted for inflation, the real per capita income is obtained, which gives the best measure of an increase in a country’s economic efficiency.
3. Which among the following imposes a greater burden (relative to resources) on the poor than on the rich ?
[A] Progressive tax
[B] Regressive Tax
[C] Lump Sum tax
[D] Proportional tax
Show Answer
Correct Answer: B [Regressive Tax]
Notes:
A regressive tax is the one in which tax rate decreases as the amount subject to taxation increases; and the tax rate progresses from high to low. The lowest amount is subject to higher taxation and this leads to individuals with low income bear the highest burden of regressive taxes. Such tax does not take into account the ability to pay.
4. Which among the following is India’s largest multi-state co-operative bank?
[A] Vijaya Bank
[B] Saraswat Bank
[C] Union co-operative bank
[D] The Madhya Pradesh Rajya Sahakari Bank
Show Answer
Correct Answer: B [Saraswat Bank]
Notes:
Saraswat Bank is India’s largest multi-state co-operative bank. It’s also the largest urban co-operative bank in Asia. Saraswat Bank operates in six states: Maharashtra, Goa, Gujarat, Delhi, Madhya Pradesh, Karnataka. The bank was established in 1933 and has been growing for over a century.
5. In which year, the practice of presenting the railway budget separate from the general budget (or vice versa in true sense) started in India?
[A] 1920
[B] 1924
[C] 1925
[D] 1930
Show Answer
Correct Answer: B [1924]
Notes:
In the year 1924, the practice of presenting the railway budget separately from the general budget (or vice versa in true sense) started in India.
6. Bring out the qualitative control instrument of Reserve Bank of India from the given statements?
[A] RBI increases Reverse Repo rate in the quarterly review of the monetary policy
[B] RBI decreases the CRR rate in the quarterly review of the monetary policy
[C] RBI decreases the Bank rate in the quarterly review of the monetary policy
[D] RBI announces selective credit control in the quarterly review of the monetary policy
Show Answer
Correct Answer: D [RBI announces selective credit control in the quarterly review of the monetary policy]
Notes:
The correct answer is “RBI announces selective credit control in the quarterly review of the monetary policy.” Selective credit control is a qualitative tool used by the Reserve Bank of India (RBI) to regulate the flow of credit to specific sectors, ensuring that credit is directed towards priority areas of the economy. This approach allows the RBI to manage inflation and economic growth more effectively. In contrast, the other options (Reverse Repo rate, CRR, and Bank rate adjustments) are quantitative tools aimed at controlling the overall money supply.
7. In context with the financial markets , which among the following is not allowed at present in India?
[A] currency futures
[B] interest rate futures
[C] credit default swaps (CDS)
[D] Commodity future
Show Answer
Correct Answer: C [credit default swaps (CDS)]
Notes:
Credit Default Swaps (CDS) are not allowed in India as of now. CDS are financial derivatives that allow an investor to “swap” or transfer the credit risk of a borrower. While they are widely used in developed markets, their introduction in India has been cautious due to concerns over systemic risk and market stability. The Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI) have focused on regulating derivatives to prevent excessive risk-taking.
8. Which among the following is not an important payment and settlement systems in India?
[A] Clearing House Automated Payment System
[B] Real Time Gross Settlement System
[C] National Electronic Clearing System
[D] National Electronic Clearing System
Show Answer
Correct Answer: A [Clearing House Automated Payment System]
Notes:
Clearing House Automated Payment System CHAPS is in UK
9. For which of the following, the Reserve Bank of India has stipulated a maximum Capital Adequacy Requirements in India?
[A] Private Sector Banks
[B] Banks that Undertake Insurance Business
[C] Local Area Banks
[D] Scheduled Commercial Banks
Show Answer
Correct Answer: C [Local Area Banks]
10. The basic WTO principle with reference to trade barriers is that:
[A] Trade barriers can be imposed by any country that believes it will benefit from such trade barriers
[B] Trade Barriers should be lowered equally and without discrimination for all member countries
[C] Trade Barriers can be imposed if a majority of the members of the WTO agree
[D] Trade Barriers should be the same in all member countries so that the result is equivalent to free trade
Show Answer
Correct Answer: B [ Trade Barriers should be lowered equally and without discrimination for all member countries ]
Notes:
The correct answer is that trade barriers should be lowered equally and without discrimination for all member countries. This principle is rooted in the Most-Favored-Nation (MFN) clause of the World Trade Organization (WTO), which mandates that any favorable trading terms offered to one member must be extended to all members. This aims to promote fair competition and prevent trade discrimination, fostering a more open and equitable global trading system. The WTO, established in 1995, has 164 member countries, emphasizing the importance of non-discriminatory trade practices.
