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. Which among the following is an essential feature of a commercial bank?
[A] providing Locker facilities
[B] dealing with credit
[C] providing business information and data
[D] Sale of securities
Show Answer
Correct Answer: B [dealing with credit]
Notes:
Section 5 of Banking Regulation Act 1949 defines Banking as the act of accepting deposits for the purpose of lending. Commercial banks deal with money, accepts deposits and advance short-term loans / credits.
2. In which Five Year Plan was the Khadi and Village Industries Commission launched?
[A] First
[B] Second
[C] Third
[D] Fourth
Show Answer
Correct Answer: B [Second]
Notes:
The Khadi and Village Industries Commission was established in April 1957 during the Second Five Year Plan. It assumed the functions of the former All India Khadi and Village Industries Board. The commission operates as a statutory body under the Ministry of Micro, Small and Medium Enterprises, Government of India. Its objectives include promoting and developing khadi and village industries in rural areas.
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 of the following is not a core principle of progressive taxation?
[A] Ability to pay
[B] Equity and redistribution
[C] Vertical fairness
[D] Administrative convenience
Show Answer
Correct Answer: D [Administrative convenience]
Notes:
Progressive taxation is designed around the ability-to-pay principle, where taxpayers with higher incomes contribute at higher rates. Its main goals include equity, vertical fairness, and redistribution of income toward a more balanced tax burden. Administrative convenience is a useful feature of any tax system, but it is not considered a core principle of progressive taxation itself. Therefore, the correct answer is administrative convenience.
5. Which is not an indirect tax?
[A] Corporation Tax
[B] Goods and Services Tax (GST)
[C] Customs Duty
[D] Excise Duty
Show Answer
Correct Answer: A [Corporation Tax]
Notes:
Corporation Tax is a direct tax imposed on the net income or profit of corporations and paid directly by companies to the government. Goods and Services Tax, Customs Duty, and Excise Duty are indirect taxes collected from consumers by intermediaries. The corporate tax rate in India for domestic companies was reduced to 22 percent in 2019.
6. With reference to the business, what is working capital?
[A] The investment made in the business
[B] Fixed assets
[C] Circulating assets- stocks, cash and debts owed to the business
[D] Amount spent on machinery or for building up stock
Show Answer
Correct Answer: C [ Circulating assets- stocks, cash and debts owed to the business ]
Notes:
Current Assets minus Current Liabilities is known as working capital.
7. Which among the following is a money market instrument of shortest tenure?
[A] Notice money
[B] Call money
[C] Near Money
[D] Term Money
Show Answer
Correct Answer: B [ Call money ]
Notes:
The call money is the short-term money market instrument where money is borrowed or lent on demand for a day. It is also known as overnight money market instrument. Intervening holidays and/or Sunday are excluded for this purpose. Thus, it is money borrowed on a day and repaid on the next working day (irrespective of the number of intervening holidays).
8. The Consumer Welfare Fund is mainly financed through which source?
[A] Excise duty on manufactured goods
[B] Mandatory business contributions
[C] Unclaimed duty refunds and unused indirect tax
[D] Voluntary consumer donations
Show Answer
Correct Answer: C [Unclaimed duty refunds and unused indirect tax]
Notes:
The Consumer Welfare Fund was established under Section 57 of the CGST Act, 2017. Its main sources are unclaimed duty refunds under Central Excise and Customs Acts and unutilized indirect tax amounts not refundable to individuals. Receipts under GST, including unclaimed tax refunds, also finance the fund. The Department of Consumer Affairs administers the fund.
9. In what form do banks maintain the Cash Reserve Ratio (CRR)?
[A] Government Securities
[B] Physical Cash in Hand
[C] Deposits with the Reserve Bank of India
[D] A Combination of Cash and Government Securities
Show Answer
Correct Answer: C [Deposits with the Reserve Bank of India]
Notes:
Cash Reserve Ratio (CRR) is the portion of a bank’s Net Demand and Time Liabilities that must be kept as cash balances with the Reserve Bank of India. It is maintained only as a deposit with the RBI, not in government securities or cash held by the bank. The CRR rate is decided by the RBI under its monetary policy framework and can be changed from time to time. This requirement helps the central bank regulate liquidity in the banking system.
10. Measuring of core inflation rate, excludes commodities like:
- Food
- Crude Oil
- Precious metals
- Livestock and meat
Select the correct option from codes given below:
[A] 1 & 2 Only
[B] 1, 2 & 3 Only
[C] 3 & 4 Only
[D] 1, 2 & 4 Only
Show Answer
Correct Answer: D [1, 2 & 4 Only]
Notes:
Core inflation is a measure of inflation that excludes certain items that face volatile price movements. It excludes transitory or temporary price volatility as in the case of some commodities such as food items, energy products etc.
