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. The Core inflation is different from the general inflation because of the following?
[A] Core Inflation is caused by the supply Shock in certain essential commodities
[B] Core Inflation is the sudden increase in certain items of food grains
[C] Core Inflation is the inflation rate of a particular basket of commodities
[D] Core Inflation is just a misnomer
Show Answer
Correct Answer: C [Core Inflation is the inflation rate of a particular basket of commodities]
Notes:
Core Inflation is the rate of inflation calculated to exclude certain items that are subject to sudden and short-lived price movements, mainly food and energy. Core inflation is considered a better indicator of overall long-term than un-adjusted headline inflation.
2. What was the period of India’s First Five Year Plan?
[A] 1951-56
[B] 1961-66
[C] 1969-1974
[D] 1979-1984
Show Answer
Correct Answer: A [1951-56]
Notes:
India’s First Five-year Plan was implemented from the year 1951 till 1956. It mainly focused on the development of primary sector. The Plan was based on the Harrod–Domar model implemented with some modifications.
3. Which defines fiduciary issue of currency notes?
[A] The portion of notes issued beyond metallic reserves, backed by trust or securities
[B] The issue of notes with metallic backing
[C] The issue of notes without any metallic backing
[D] The issue of notes with partial metallic backing
Show Answer
Correct Answer: A [The portion of notes issued beyond metallic reserves, backed by trust or securities]
Notes:
Fiduciary issue is the amount of currency notes issued in excess of gold or silver reserves, backed by government securities or public trust. The Bank Charter Act of 1844 introduced the fiduciary system in England, limiting note issue not fully backed by gold. Modern systems such as those used by the Reserve Bank of India also use the fiduciary issue principle.
4. Which is the largest source of irrigation in India after rainfall?
[A] Canals
[B] Rivers
[C] Tanks
[D] Tubewells
Show Answer
Correct Answer: D [Tubewells]
Notes:
Tubewells provide the highest share of irrigation among artificial sources in India after rainfall. According to the 2015-16 Agricultural Census, tubewells accounted for about 46% of the net irrigated area. Tubewell irrigation is most prevalent in northern Indian states such as Uttar Pradesh and Punjab. Canals, rivers, and tanks contribute comparatively less to the total irrigated area.
5. With which of the following countries, India has signed First Tax Information Exchange Agreement?
[A] Belize
[B] Bermuda
[C] Guyana
[D] Honduras
Show Answer
Correct Answer: B [Bermuda]
Notes:
India and Bermuda signed a Tax Information Exchange Agreement (TIEA) in 2010. This was the first TIEA being signed by India.
6. Which among the following coal producer of India is outside the Coal India Ltd?
[A] Southern Eastern Coalfields (Bilaspur)
[B] Bharat Coking Coal (Dhanbad)
[C] Mahanandi Coalfields (Sambalpur)
[D] Singerani Collieries Company (Telangana)
Show Answer
Correct Answer: D [Singerani Collieries Company (Telangana)]
Notes:
Singareni Collieries Company Limited (SCCL) is jointly owned by the Government of Telangana and Government of India on a 51:49 equity basis.
7. The Direct Taxes Code (DTC) is associated with which tax?
[A] Income Tax
[B] Sales Tax
[C] Excise Duty
[D] Service Tax
Show Answer
Correct Answer: A [Income Tax]
Notes:
The Direct Taxes Code (DTC) was proposed in 2009 to replace the Income Tax Act, 1961. It aimed to simplify and consolidate laws related to direct taxes in India. The DTC focused on income tax and other direct taxes. The DTC Bill was introduced in Parliament in 2010 but has not been enacted as of 2024. Indirect taxes like sales tax and excise duty are not covered.
8. When investors buy securities directly from the company issuing them, then it is termed as __:
[A] Follow on Public Offer
[B] Initial public offering
[C] Primary Market
[D] Secondary Market
Show Answer
Correct Answer: C [Primary Market ]
Notes:
C is the correct answer. In case of the primary market, investors buy securities directly from the company issuing them, while in the secondary market, investor’s trade securities among themselves. Thus, Primary market is for raising the Equity capital or share capital, which is the owners’ interest on the assets of the enterprise after deducting all its liabilities. This mechanism of buying and selling shares through stock exchange is known as the secondary markets.
9. Which of the following indicates a Liquidity trap?
[A] expansionary monetary policy does not encourage economic growth
[B] open market operations results in decrease in interest rates
[C] government prefers fiscal policies over monetary policies to regulate the money supply
[D] government undergoes liquidation of the government holdings on larger-scale to reduce fiscal deficit
Show Answer
Correct Answer: A [ expansionary monetary policy does not encourage economic growth ]
Notes:
Liquidity trap is a situation when expansionary monetary policy does not increase the interest rate, income and hence does not encourage the economic growth.
10. The SPS Agreement under the WTO is most concerned with which among the following?
[A] Trade of plant genetic materials
[B] Phytosanitary Measures
[C] Technical Barriers to Trade
[D] Trade in Fertilizers
Show Answer
Correct Answer: B [ Phytosanitary Measures ]
Notes:
The Agreement on the Application of Sanitary and Phytosanitary Measures – also known as the SPS Agreement is an international treaty of the World Trade Organization. It was negotiated during the Uruguay Round of the General Agreement on Tariffs and Trade, and entered into force with the establishment of the WTO at the beginning of 1995. Under the SPS agreement, the WTO sets constraints on member-states’ policies relating to food safety (bacterial contaminants, pesticides, inspection and labeling) as well as animal and plant health (phytosanitation) with respect to imported pests and diseases. The SPS agreement is closely linked to the Agreement on Technical Barriers to Trade, which was signed in the same year and has similar goals.
