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. A persistent fall in the general price level of goods and services is known as __:
[A] Deflation
[B] Disinflation
[C] Stagflation
[D] Depression
Show Answer
Correct Answer: A [ Deflation ]
Notes:
Inflation refers to rise in general price level of goods and services, deflation is fall in general price level of goods and services. Deflation is inflation in negative zone, i.e. a decrease in the general price level of goods and services.
2. Why the Transfer incomes are not included in the national income accounts?
[A] They do not represent payment for economic activity
[B] There is now way of calculating them correctly
[C] They are already included in the total of personal income
[D] They are already included in company earnings
Show Answer
Correct Answer: A [They do not represent payment for economic activity]
Notes:
Transfer payments made by the Government including subsidies, government aid, social security assistance such as health insurance payment and scholarship are not included in the national income. Because they do not represent any economic activity.
3. Which among the following is a correct impact of dear Money ?
[A] Borrowings become cheap
[B] Borrowings become expensive
[C] Borrowings become either cheap or expensive
[D] There is no impact of Dear Money on Borrowings
Show Answer
Correct Answer: B [Borrowings become expensive]
Notes:
Dear money refers to money that is hard-to-borrow. Money is hard to borrow due to several reasons such as high interest rates. When central banks implement tight monetary policy, interest rates go up and this will will make money hard to borrow.
4. Who published “The Case for Flexible Exchange Rates” in 1953?
[A] John Maynard Keynes
[B] Milton Friedman
[C] Friedrich Lutz
[D] Harry Johnson
Show Answer
Correct Answer: B [Milton Friedman]
Notes:
Milton Friedman published “The Case for Flexible Exchange Rates” in 1953. Friedman’s essay advocated flexible exchange rates to provide monetary policy independence. The paper provided the foundational arguments and theory supporting flexible exchange rate systems over fixed ones. Friedman’s analysis influenced international monetary economics from the 1950s onward.
5. Central Employment Guarantee Council overlooks the progress of which among the following scheme?
[A] MGNREGA
[B] Food for Works Programme
[C] National Rural Livelihood Mission
[D] All of them
Show Answer
Correct Answer: A [MGNREGA]
Notes:
Central Employment Guarantee Council was constituted under Section 10 of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), 2005 to discharge the duties and functions under this act.
6. Which of the following is the correct definition of ‘Effective Revenue Deficit’?
[A] difference between revenue deficit and grants for creation of capital assets
[B] difference between revenue deficit and interest liabilities of the Government
[C] difference between fiscal receipt and net expenditure of the government
[D] difference between fiscal receipt and money spent on various social services
Show Answer
Correct Answer: A [ difference between revenue deficit and grants for creation of capital assets ]
Notes:
Effective Revenue Deficit is the difference between revenue deficit and grants for creation of capital assets.
7. What is amortization in banking?
[A] A lump-sum repayment of loan at maturity
[B] Gradual repayment with both principal and interest
[C] Payment of interest only, principal at end
[D] Writing off intangible asset expenses
Show Answer
Correct Answer: B [Gradual repayment with both principal and interest]
Notes:
Amortization refers to scheduled loan repayment through periodic payments including both principal and interest. Each payment gradually reduces the outstanding loan balance. Early payments cover more interest; later ones pay more principal. Mortgages and term loans typically follow an amortization schedule with set time frames like 15 or 30 years. The balance decreases with every regular installment.
8. Which among the following is the primary difference between a free trade area and a customs union?
[A] members of a free trade area adopt a common set of barriers for trade between the members
[B] a free trade area is considered a trade bloc and a customs union is not
[C] members of a customs union adopt a common set of external trade barriers
[D] a free trade area can include parts of a country and a customs union includes entire countries
Show Answer
Correct Answer: C [ members of a customs union adopt a common set of external trade barriers ]
Notes:
The primary difference between a free trade area and a customs union is that members of a customs union adopt a common set of external trade barriers. In a free trade area, member countries eliminate tariffs among themselves but maintain their own external tariffs. Examples include NAFTA (now USMCA) as a free trade area and the European Union as a customs union, which has a unified external tariff policy.
9. Which organization publishes the Inclusive Growth and Development Report?
[A] World Bank
[B] International Monetary Fund
[C] World Economic Forum
[D] Organisation for Economic Cooperation and Development
Show Answer
Correct Answer: C [World Economic Forum]
Notes:
The World Economic Forum publishes the Inclusive Growth and Development Report. The Inclusive Development Index was introduced with this report in 2017. The report evaluates economies using parameters like education, employment, labor compensation, and social protection. The World Economic Forum is headquartered in Geneva, Switzerland, and began the series under its System Initiative on Economic Growth and Social Inclusion.
10. After which five year plan, ‘The Rolling plan’ was implemented?
[A] Third Plan
[B] Seventh plan
[C] Fifth plan
[D] Ninth Plan
Show Answer
Correct Answer: C [Fifth plan]
Notes:
Rolling Plan (1979–1980) The Janata Party government rejected the Fifth Five-Year Plan and introduced a new Sixth Five-Year Plan (1978–1980).
