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. Who among the following is called father of Economics?
[A] David Hume
[B] Lamarck
[C] Adam Smith
[D] John Stuart Mill
Show Answer
Correct Answer: C [Adam Smith]
Notes:
Adam smith is considered as father of Modern Economics. In his book “The nature & causes of wealth of the Nation’s 1776, he has described economics as science of wealth. According to him economy is the study of wealth only and it deals with its production and consumption. Only material goods which are scarce and useful are wealth.
2. If the demand and supply of a commodity increase by an equal absolute amount, what will be the effect on market price?
[A] Increase
[B] Decrease
[C] Remain Stable
[D] First decrease then increase
Show Answer
Correct Answer: C [Remain Stable]
Notes:
When the market is in equilibrium, and when the demand and supply of a commodity increase by an equal absolute amount, the market price will not increase, rather it will remain stable.
3. A rise in price of one commodity will induce a fall in demand of another commodity, then the commodities are___?
[A] Complimentary
[B] Supplementary
[C] Competing
[D] Auxiliary
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Correct Answer: A [Complimentary]
Notes:
A complementary commodity is the one which is used along with another commodity. When the price of a particular commodity rises, it will induce a fall in demand of another commodity. This is because consumers may not prefer to buy only the complement.
4. Pump priming mainly deals with which of the following?
[A] Increased government expenditure during recession
[B] Decreased government expenditure during recession
[C] Increased government income during recession
[D] Decreased government income during recession
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Correct Answer: A [Increased government expenditure during recession]
Notes:
Pump priming refers to the collective measures taken by the governments during recession to simulate the economy during recession. This is done usually by cutting the taxes and increased public spending.
5. When does RBI sell government securities via Open Market Operations?
[A] During liquidity deficit from heavy government borrowing
[B] When foreign funds inflow is low
[C] When banks face fund shortages
[D] During surplus liquidity from large foreign capital inflows
Show Answer
Correct Answer: D [During surplus liquidity from large foreign capital inflows]
Notes:
The Reserve Bank of India conducts Open Market Operations to manage liquidity. It sells government securities when there is surplus liquidity, such as during large foreign capital inflows that increase rupee supply. Selling securities absorbs excess funds from the banking system. In periods of liquidity shortage, RBI buys securities. In FY26, liquidity injections were handled through purchases, not sales.
6. Which of these is NOT an anti-inflationary monetary measure?
[A] Increasing central bank discount rate
[B] Raising Cash Reserve Ratio
[C] Implementing credit rationing policies
[D] Open market purchase of government securities
Show Answer
Correct Answer: D [Open market purchase of government securities]
Notes:
Open market purchase of government securities injects liquidity into the banking system. The Reserve Bank of India buys government securities to increase money supply. This is an expansionary policy used to stimulate economic growth. Anti-inflationary measures contract money supply. RBI uses open market sales, not purchases, to control inflation. Open market operations are conducted under Section 17 of the Reserve Bank of India Act, 1934.
7. Where are the headquarters of India Tourism Development Corporation (ITDC)?
[A] New Delhi
[B] Jaipur
[C] Surat
[D] Raipur
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Correct Answer: A [New Delhi]
Notes:
ITDC is an hospitality, retail and Education company owned by Government of India, under Ministry of Tourism. Its headquarters is located in New Delhi.
8. Which of the following is India’s first payments bank?
[A] Jio Payments Bank Ltd
[B] Paytm Payments Bank
[C] India Post Payments Bank
[D] Airtel Payments Bank
Show Answer
Correct Answer: D [ Airtel Payments Bank ]
Notes:
Fourth option is the correct answer. Airtel Payments Bank is India’s first payments bank.
9. Who publishes the Travel and Tourism Development Index (TTDI)?
[A] World Tourism Organization
[B] World Travel & Tourism Council
[C] World Economic Forum
[D] Amnesty International
Show Answer
Correct Answer: C [World Economic Forum]
Notes:
The World Economic Forum publishes the Travel and Tourism Development Index. The index replaced the Travel & Tourism Competitiveness Index in 2021. TTDI assesses the tourism sectors of various countries. The World Economic Forum is headquartered in Geneva, Switzerland and was founded in 1971. The latest TTDI report was released in 2024.
10. Which one out of the following is least liquid among the measures of money supply?
[A] M1
[B] M2
[C] M3
[D] M4
Show Answer
Correct Answer: D [M4]
Notes:
Liquidity order is M1>M2>M3>M4 i.e. M1 is most liquid and M4 is least liquid.
