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. Who among the following is called father of Economics?
[A] David Hume
[B] Lamarck
[C] Adam Smith
[D] John Stuart Mill
Show Answer
Correct Answer: C [Adam Smith]
Notes:
Adam smith is considered as father of Modern Economics. In his book “The nature & causes of wealth of the Nation’s 1776, he has described economics as science of wealth. According to him economy is the study of wealth only and it deals with its production and consumption. Only material goods which are scarce and useful are wealth.
2. Who among the following Indian Economists played a crucial role in inception of MNREGA?
[A] Amartya Sen
[B] Jean Dreze
[C] Jagdish Natwarlal Bhagwati
[D] Dr. Vijay Kelkar
Show Answer
Correct Answer: B [Jean Dreze]
Notes:
Jean Dreze is an Economist of Indian Origin born in Belgium. He conceptualized and drafted the first version of MGNREGA. He was the member of National Advisory Council and has coauthored “An Uncertain Glory: India and its Contradiction” with noted economist Amartya Sen.
3. Which among the following can be called a Balanced Budget ?
[A] Total Revenue of the Government Exceeding Total Expenditure
[B] Total Expenditure of the Government Exceeding Total Revenue
[C] Total Revenue of the Government exactly equal to total Expenditure
[D] Total Expenditure of the Government exceeding or equal to Total Revenue
Show Answer
Correct Answer: C [Total Revenue of the Government exactly equal to total Expenditure]
Notes:
A balanced budget is a budget in which revenues are equal to expenditures. This means that the government is not spending more money than it is bringing in, and it is not running a deficit. A balanced budget is typically seen as a positive thing, because it means that the government is not taking on more debt in order to fund its operations.
4. Pump priming mainly deals with which of the following?
[A] Increased government expenditure during recession
[B] Decreased government expenditure during recession
[C] Increased government income during recession
[D] Decreased government income during recession
Show Answer
Correct Answer: A [Increased government expenditure during recession]
Notes:
Pump priming refers to the collective measures taken by the governments during recession to simulate the economy during recession. This is done usually by cutting the taxes and increased public spending.
5. 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.
6. Which among the following can not be called an antiinflationary measure?
[A] Raising the Bank Rates
[B] Raising the Reserve Ratio Requirements
[C] Purchase of securities in the Open Markets
[D] Rationing of the Credit
Show Answer
Correct Answer: C [Purchase of securities in the Open Markets]
Notes:
The correct answer is “Purchase of securities in the Open Markets.” This action is part of an expansionary monetary policy, aimed at increasing money supply and stimulating the economy, which can lead to inflation. In contrast, raising bank rates and reserve ratio requirements are contractionary measures that help control inflation by reducing money supply. Rationing of credit also limits borrowing, thus curbing inflationary pressures.
7. While discussing the pros and cons of the Foreign Direct Investments, a situation called ‘Expropriation’ is discussed. What is ‘Expropriation’?
[A] Expropriation is a situation where government can take control of a firm’s property and assets, if it feels
[B] Expropriation is one of the fundamental means by which one can invest in property
[C] Expropriation is one of the aspects of FDI planning closely related to potential profits and return on
[D] Expropriation is a ban by the Government on firm’s repatriation of profits to its home country
Show Answer
Correct Answer: A [Expropriation is a situation where government can take control of a firm’s property and assets, if it feels]
Notes:
Expropriation is motivated and forceful confiscation and redistribution of private property, where government can take control of a firm’s property and assets, if it feels that the enterprise is a threat to national security
8. If the contribution of the agricultural sector is decreasing in a country’s economy, then what conclusion can be drawn?
[A] The country is growing in the direction of being a developed nation
[B] The country is moving towards becoming developing nation
[C] The country is moving towards becoming less developed nation
[D] The economic growth rate of the country has stopped
Show Answer
Correct Answer: A [The country is growing in the direction of being a developed nation]
Notes:
If the contribution of the agricultural sector is decreasing in a country’s economy, the country is growing in the direction of being a developed nation. Contribution of Agriculture in the GDP of developed nations decreases and the contribution of service and manufacturing sector is very high.
9. What do we call the official interest rate at which RBI provides loans to the banking system?
[A] Reverse repo rate
[B] Bank rate
[C] SLR
[D] CRR
Show Answer
Correct Answer: B [Bank rate]
Notes:
Bank Rate refers to the official interest rate at which RBI will provide loans to the banking system which includes commercial / cooperative banks, development banks etc.
10. The demand for heavy loans can lead to which of the following?
[A] excess funds for banks
[B] Deficiencies for banks
[C] Organized reservation
[D] Competitive reservations
Show Answer
Correct Answer: B [ Deficiencies for banks ]
Notes:
Daily and hourly loans are in heavy demand and will incur heavy fines if they are returned late. Fines will apply almost as soon as the item is overdue.
