Indian Economy MCQs

Notes:
The National Rural Credit stabilization fund is a sector specific finds maintained with National Bank for Agriculture and Rural Development. This fund includes contributions from Central and State Governments, sums contributed by RBI and the sums contributed by NABARD’s board every year.

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.

Notes:
In a progressive tax system, higher income earners pay a higher tax rate compared to those who earn less. This is based on the assumption that individuals who earn more have the ability and the capacity to pay more taxes. Most income tax systems in the world are progressive, including the United States, Canada, and the United Kingdom.

Notes:
The Multidimensional Poverty Index (MPI) was introduced in 2010 by UNDP and the Oxford Poverty and Human Development Initiative. It uses 10 indicators organized across three dimensions: health, education, and standard of living. These indicators include nutrition, child mortality, years of schooling, school attendance, cooking fuel, sanitation, drinking water, electricity, housing, and assets.

Notes:
Department of Industrial Policy and Promotion is mandated to receive FDI proposals under the Government Route since 2017. It operates under the Ministry of Commerce and Industry. The Foreign Investment Facilitation Portal is managed by the Department for Promotion of Industry and Internal Trade, previously DIPP. FDI proposals in single brand retailing must be filed online with this department, complying with FEMA regulations.

Notes:
The correct representation of the Money Multiplier is the ratio of Broad Money (M3) to Reserved Money (M0), expressed as M3/M0. The Money Multiplier indicates how much money supply can increase based on the reserves held by banks. M0 represents the total of a country’s physical currency, while M3 includes all liquid or near-liquid assets. This relationship is crucial in understanding monetary policy and banking operations.

Notes:
Core inflation excludes food and energy items, which are subject to frequent supply shocks and high volatility. This exclusion allows core inflation to measure underlying and persistent price movements in the economy. Policymakers in India and other countries use core inflation for short-term policy decisions as it remains more stable compared to headline inflation, which fluctuates more due to volatile components.

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The World Economic Forum published the Global Competitiveness Report annually from 2004 to 2020. The report used the Global Competitiveness Index to assess countries’ economic fundamentals, institutions, and policies. The Global Competitiveness Report was discontinued after 2020 and is not currently published by any organization.

Notes:
According to the Economic Survey 2025-26, India’s services sector contributed 56.4% to Gross Value Added in FY25. Services exports reached USD 387.5 billion in FY25. The Survey reports that expanding digital infrastructure and high-speed connectivity is essential for supporting digitally delivered services. Government focus is on scaling infrastructure, with projected data center capacity of 8 GW by 2030. Digital enablement is highlighted as critical for sectoral growth.

Notes:
The Ministry of Panchayati Raj launched the Rural Business Hubs (RBH) initiative in 2007. The “Haat to Hypermarket” objective aims to connect rural producers to wider markets. The ministry focuses on rural empowerment through economic partnerships and market linkages for local artisans. RBH projects involve village industries, micro-enterprises, and cooperatives under the ministry’s schemes.