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. Export of which of the following is an Invisible Export?
[A] Services
[B] Prohibited goods
[C] Unrecorded goods
[D] Goods through smuggling
Show Answer
Correct Answer: A [ Services ]
Notes:
Any export that does not have a tangible physical presence (e.g. expertise, insurance underwriting). Here, Invisible Export means export of Services
2. During inflation, how do banks usually set their loan prices?
[A] A decreasing trend
[B] Constant level
[C] No relation to inflation
[D] An increasing trend
Show Answer
Correct Answer: D [An increasing trend]
Notes:
Inflation reduces currency purchasing power and drives general price increases. Banks respond by raising loan prices due to higher costs, including increased wages and operational expenditures. Central banks often hike interest rates during inflation to control rising prices. Higher interest rates result in increased loan pricing by banks to maintain profit margins.
3. Which commodity is directly affected by international crude oil price fluctuations?
[A] Edible Oils
[B] Cereals
[C] Consumer nondurables
[D] Gold & Silver
Show Answer
Correct Answer: D [Gold & Silver]
Notes:
Gold and silver prices are directly influenced by changes in international crude oil prices. Increases in crude oil prices often cause currency depreciation in oil-importing countries, raising the cost of gold and silver imports. Price fluctuations can also increase demand for gold and silver as safe-haven assets. The global commodities market historically links oil and precious metals prices.
4. Which among the following bodies in India protects the interests of consumers against anti-competitive practices of market entities?
[A] National Consumer Forum
[B] Competition Commission of India
[C] National Consumer Disputes Redressal Commission
[D] Central Vigilance Commission
Show Answer
Correct Answer: B [Competition Commission of India]
Notes:
The Competition Commission of India (CCI) is the statutory body responsible for preventing practices that have an adverse effect on competition in India. It enforces the Competition Act, 2002 and works to promote fair competition, protect consumer interests and ensure freedom of trade in markets. It is a quasi-judicial authority and the correct choice among the given options. The consumer forums and the Central Vigilance Commission do not perform this competition-regulation function.
5. What does “round tripping” in FDI refer to?
[A] The use of FDI to set up subsidiaries worldwide
[B] Domestic capital routed abroad and reinvested as foreign investment
[C] Repatriation of FDI profits to the investor’s home country
[D] Cross-border flows through free trade zones without taxes
Show Answer
Correct Answer: B [Domestic capital routed abroad and reinvested as foreign investment]
Notes:
Round tripping in FDI involves domestic capital sent to foreign jurisdictions and then returning as foreign investment. Such investments often use offshore financial centers or low-tax countries. This mechanism enables companies to claim incentives for foreign investors. It led to significant FDI inflows for countries such as India and China through countries like Mauritius and Hong Kong via special purpose vehicles.
6. 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.
7. Why the Indirect taxes are termed regressive taxing mechanisms?
[A] They are charged at higher rates than direct taxes
[B] They are charged the same for all income groups
[C] They are not charged the same for all income groups
[D] ]None of the above is a correct reason
Show Answer
Correct Answer: B [They are charged the same for all income groups]
Notes:
The indirect taxes like VAT etc are paid by everyone if they buy any product irrespective of financial conditions. Direct taxing is considered the most progressive taxing mechanisms because they justify the income levels of the people
8. Which among the following is India’s first Oil refinery?
[A] Guwahati Refinery
[B] Vishakhapatnam Refinery
[C] Digboi Refinery
[D] Barauni Refinery
Show Answer
Correct Answer: C [ Digboi Refinery ]
Notes:
Crude oil was discovered here in late 19th century. Digboi is known as the Oil City of Assam where the first oil well in Asia was drilled. The first refinery was started here as early as 1901. Digboi has the oldest oil Refinery in operation.
9. Which of the following is true about NBFC?
[A] NBFC cannot accept demand deposits
[B] NBFCs cannot issue cheques drawn on itself
[C] Deposit insurance facility of DICGC is not available to depositors of NBFCs
[D] All are true
Show Answer
Correct Answer: D [All are true]
Notes:
All the three points mentioned above are true. These points differentiate NBFC and banks
10. Which of the following is a balanced fertilizer for plants? (UPSC Prelims 1979).
[A] Urea
[B] Ammonia sulphate
[C] Nitrates
[D] Compost
Show Answer
Correct Answer: D [Compost]
Notes:
Fertilizers are used by farmers for the better crop growth. Normally compost is considered as the balanced fertilizer as it does not harm plants and increase the productivity. But considering artificial fertilizers a balanced fertilizer is chosen which have balanced amount of NPK. Generally, nitrogen is used by plants to produce green growth and potassium for flower and fruit development. A balanced fertilizer such as 10-10-10 of NPK is a good choice for vegetables and other high-nutrient plants.
