Indian Economy MCQs

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Inflation reduces currency purchasing power and drives general price increases. Banks respond by raising loan prices due to higher costs, including increased wages and operational expenditures. Central banks often hike interest rates during inflation to control rising prices. Higher interest rates result in increased loan pricing by banks to maintain profit margins.

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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.

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RBI’s revised PCA framework for scheduled commercial banks focuses on three broad parameters: capital, asset quality and leverage. The trigger indicators include capital ratios such as CRAR and CET1, net NPA ratio, and leverage ratio. Return on assets is not part of the current trigger set, and the leverage-related trigger is framed as a low Tier 1 leverage ratio. Therefore, among the given options, low Tier 1 leverage ratio is not a non-trigger; the other three are used as PCA trigger indicators.

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The nylon and other synthetic-fibre industries fall under the policy and administrative control of the Department of Chemicals and Petrochemicals, which functions under the Ministry of Chemicals and Fertilizers. This ministry deals with petrochemicals, polymers and related industrial development in India. Hence, it is the correct answer for the nylon/synthetic-fibre industry, not the ministries concerned with textiles, petroleum administration, or foreign trade policy.

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Singareni Collieries Company Limited (SCCL) is not a subsidiary of Coal India Limited. It is a separate coal mining company in India, jointly owned by the Government of Telangana and the Government of India. By contrast, South Eastern Coalfields, Bharat Coking Coal, and Mahanadi Coalfields are all subsidiaries of Coal India Limited. Hence, the correct answer is Singareni Collieries Company Limited (Telangana).

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The Tank irrigation is more in the rocky plateau area of the county, where the rainfall is uneven and highly seasonal. The Eastern Madhya Pradesh, Chhattisgarh, Orissa, Interiors of Tamil Nadu and some parts of Andhra Pradesh have more land under tank irrigation.

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Food subsidy in India is provided through multiple channels. The government fixes Central Issue Prices for subsidized foodgrains, supplies them through the Public Distribution System, and also supports the Food Corporation of India for procurement, storage, and distribution. Hence, all three statements are correct.

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In case of High-income elasticity of demand, an increase in income is accompanied by a relatively larger increase in quantity demanded for normal goods. Thus, among the given options Car has highest income elasticity of demand.

• Car: A luxury good with high income elasticity; demand rises sharply with an increase in income.
• Milk: A necessity good with low to moderate income elasticity.
• Paddy: A basic necessity and staple food, with very low income elasticity.
• Tobacco: Considered an addictive good with low or even negative income elasticity in some cases, as demand is less income-sensitive.

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Economic development is usually associated with structural transformation: the share of agriculture/primary sector declines, while industry and services expand. It is also reflected in better institutions, infrastructure, higher productivity and rising per capita income. A larger GDP share from the primary sector generally indicates a less developed economic structure.

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Transfer Payment is the payment exchanged for return of no goods or services. It generally describes the welfare expenditure of the government such as subsidies, pensions, grants etc.