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 is NOT a core WTO agreement or mechanism?
[A] Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)
[B] General Agreement on Trade in Services (GATS)
[C] Plurilateral Agreement on Government Procurement
[D] Multilateral Agreement on Investment (MAI)
Show Answer
Correct Answer: D [Multilateral Agreement on Investment (MAI)]
Notes:
The Multilateral Agreement on Investment (MAI) was negotiated by OECD countries in the 1990s. MAI was not concluded and is not part of the World Trade Organization framework. WTO core agreements include GATS, TRIPS, and GATT. The Plurilateral Agreement on Government Procurement functions within the WTO through voluntary acceptance by signatory members only. MAI remains outside the WTO system and was never implemented.
2. In the capital market, simultaneous purchase and sale of securities to reduce the loss on purchase is known as __?
[A] Arbitrage
[B] Hedging
[C] Trend following
[D] Shorting
Show Answer
Correct Answer: A [Arbitrage]
Notes:
Arbitrage is a type of trade in which a security is simultaneously bought and sold, in different markets. This type of trade takes advantage of the difference in prices of the same financial instrument being offered on different exchanges.
3. Which city hosts the world's largest foreign exchange market?
[A] New York
[B] Singapore
[C] Tokyo
[D] London
Show Answer
Correct Answer: D [London]
Notes:
London is the world’s largest foreign exchange trading centre. In the Bank for International Settlements’ latest Triennial Central Bank Survey, it accounted for the biggest share of global FX turnover, ahead of New York, Singapore and Tokyo. The city’s dominance is supported by its strong financial infrastructure, concentration of major banks, and time-zone advantage, which allows trading overlap with both Asian and American markets.
4. In which of the following the term “cap and trade” is used?
[A] Share Broking
[B] Mutual Fund Investments
[C] Emission Trading
[D] Commodity Futures
Show Answer
Correct Answer: C [Emission Trading]
Notes:
Emissions trading (aka. cap and trade) refers to the market-based approach to control pollution by providing economic incentives for reducing the emissions of pollutants.
5. Which among the following is a balance sheet item of a bank and not an entry in the Profit and Loss account?
[A] Interest expense on deposits
[B] Interest earned on advances
[C] Profit/loss on sale of assets
[D] Deposits received from customers
Show Answer
Correct Answer: D [Deposits received from customers]
Notes:
Deposits received from customers are shown as a liability in the balance sheet of a bank. The Profit and Loss account records income and expenses such as interest earned on advances, interest expense on deposits, and profit or loss on sale of assets. Hence, unlike the other three options, customer deposits do not appear as a P&L entry. This makes deposits received from customers the correct choice.
6. What is the short name of India’s top authority for Indirect Taxes?
[A] CBDT
[B] CBEC
[C] CBIT
[D] CBIC
Show Answer
Correct Answer: D [CBIC]
Notes:
The Central Board of Indirect Taxes and Customs (CBIC) was renamed in 2018 from CBEC. CBIC is a statutory body under the Department of Revenue, Ministry of Finance. It is responsible for administration of GST, customs, excise and service tax in India. The board was originally established in 1964 by the Central Boards of Revenue Act, 1963.
7. Which one of the following is NOT generally considered a sign of economic development?
[A] Changing structure of GDP in favour of industry and services
[B] Larger share of GDP coming from the primary sector
[C] Improved infrastructure and institutional changes in an economy
[D] Rising per capita income and productivity
Show Answer
Correct Answer: B [Larger share of GDP coming from the primary sector]
Notes:
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.
8. 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 WTO promotes non-discriminatory trade rules and seeks gradual reduction of trade barriers among its members. Under the Most-Favored-Nation principle, any advantage given to one member should be extended to all members unless a specific exemption applies. This helps prevent selective treatment in international trade and supports fair competition among countries. Hence, the correct statement is that trade barriers should be lowered equally and without discrimination for all member countries.
9. Which of these is considered a sunset industry?
[A] Hydrogen fuel technology
[B] Traditional film photography
[C] Renewable energy development
[D] Artificial intelligence
Show Answer
Correct Answer: B [Traditional film photography]
Notes:
Traditional film photography was popular throughout the 20th century before digital photography emerged. Digital cameras became widely available in the late 1990s. Global sales of film cameras dropped substantially after 2000. Companies like Kodak, once leading film producers, filed for bankruptcy in 2012. The industry decline is linked to the mass adoption of digital imaging technology worldwide.
10. Who benefits the most from inflation? (UPSC Prelims 1989)
[A] Creditors
[B] Debtors
[C] Savings bank account holders
[D] Government pensioners
Show Answer
Correct Answer: B [Debtors]
Notes:
Debtors benefit from inflation as they repay loans with money of reduced purchasing power. During inflation, the real burden of debt decreases. Creditors lose since repayment occurs in depreciated currency. This effect is most significant under unanticipated inflation when previous interest rates did not account for inflation rise. Debtors’ effective liability lowers, giving them a financial advantage.
