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. An investor or speculator who subscribes to a new issue with the intention of selling them soon after allotment to realize a quick profit is called?
[A] Stag
[B] Tall
[C] Bull
[D] Bear
Show Answer
Correct Answer: A [Stag]
Notes:
The term stag means a speculator who buys and sells stocks in short timeframes to make quick profits. The motove of stag is to make profit quickly on a fast moving trend, rather than buying and holding for the long run.
2. Which of the following organizations provides Buffer Stock Financing Facility ?
[A] Reserve Bank of India
[B] Asian Development Bank
[C] International Monetary Fund
[D] World Bank
Show Answer
Correct Answer: C [International Monetary Fund]
Notes:
IMF in 1969 to provide financial assistance to members with a temporary balance of payments need arising from contributions to buffer stocks established under approved international commodity agreements
3. In which year, the practice of presenting the railway budget separate from the general budget (or vice versa in true sense) started in India?
[A] 1920
[B] 1924
[C] 1925
[D] 1930
Show Answer
Correct Answer: B [1924]
Notes:
In the year 1924, the practice of presenting the railway budget separately from the general budget (or vice versa in true sense) started in India.
4. Which among the following does not come under the monetary policy for regulating the economy?
[A] Discount rate
[B] Government spending
[C] reserve requirement
[D] Open market Operations
Show Answer
Correct Answer: B [Government spending]
Notes:
Government spending refers to the money spent by the government or public sector on the acquisition of goods and services such as education, healthcare, social protection, defence etc. It does not come under monetary policy.
5. Any banking company can undertake any business other than the banking business in accordance with the provisions contained in which among the following acts?
[A] Reserve Bank of India Act
[B] Negotiable Instruments Act
[C] Banking Regulation Act
[D] None of the above
Show Answer
Correct Answer: C [Banking Regulation Act]
Notes:
The correct answer is the Banking Regulation Act. This act governs the operations of banking companies in India and allows them to engage in non-banking activities, provided these are in accordance with the provisions set forth. The act was enacted in 1949 to regulate the banking sector and ensure financial stability. It also empowers the Reserve Bank of India to oversee and regulate banking operations.
6. Which among the following is used by the Government as a last resort in Deficit Financing?
[A] Borrowing from Foreign Sources
[B] Borrowing from Domestic Sources
[C] External Grants
[D] Printing of Currency
Show Answer
Correct Answer: D [ Printing of Currency ]
Notes:
The correct answer is “Printing of Currency.” In deficit financing, when a government faces a budget shortfall, it may resort to printing more money as a last resort. This method can lead to inflation if not managed properly. Historically, countries like Zimbabwe and Germany in the 1920s experienced hyperinflation due to excessive money printing. This approach is typically avoided until other options, such as borrowing, are exhausted.
7. Which of the following organizations has divided the countries into IDA, IBRD, and Blend countries for eligibility of loans?
[A] International Monetary Fund
[B] World Bank
[C] Asian Development Bank
[D] New Development Bank
Show Answer
Correct Answer: B [ World Bank ]
Notes:
Economies are divided into IDA, IBRD, and Blend countries based on the operational policies of the World Bank. International Development Association (IDA) countries are those with low per capita incomes that lack the financial ability to borrow from the International Bank for Reconstruction and Development (IBRD). Blend countries are eligible for IDA loans but are also eligible for IBRD loans because they are financially creditworthy.
8. With reference to various types of Banking, what is “Mixed Banking”?
[A] when banks undertake the activities of commercial and investment banking together
[B] when banks undertake the activities of wholesale and retail banking together
[C] when banks undertake the activities of offline and online banking together
[D] when banks undertake the activities of commercial and cooperative banking together
Show Answer
Correct Answer: A [when banks undertake the activities of commercial and investment banking together]
Notes:Mixed Banking is the system in which banks undertake activities of commercial and investment banking together.
- These banks give short-term and long-term loans to industrial concerns.
- The banks appoint experts which give valuable advice on various financial issues and also help gauge the financial health of companies.
- Industries don’t have to run to different places for differential financial needs.
- They thus promote rapid industrialization.
- They may however pose a grave threat to liquidity of a bank and lead to bad debts.
9. Which state in India is the largest producer of salt?
[A] Kerala
[B] Andhra Pradesh
[C] Gujarat
[D] Maharashtra
Show Answer
Correct Answer: C [Gujarat]
Notes:
Gujarat is the largest producer of salt in India because of its extensive dry coast. Gujarat accounts for 77% of the salt produced in our country. Salt industries of Gujarat are thriving in Surat, Kutch, Bhavnagar, Rajkot, Anand, etc.
10. Which is the most important raw material for generation of power in India?
[A] Coal
[B] Silicon
[C] Aluminum
[D] Ironstone
Show Answer
Correct Answer: A [Coal]
Notes:
In India, major proportion of power is generated from thermal sources where the main raw material used is coal. Around 83% of thermal power is generated using coal as a raw material, whereas 16% of thermal power is generated with the help of Gas and 1% of thermal power is generated with the help of Oil.