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. Approval of which among the following authorities alone would be sufficient to draw funds from Consolidated Fund of India ?
[A] Only Parliament
[B] Only President
[C] Either Parliament or President
[D] Both Parliament and President
Show Answer
Correct Answer: A [Only Parliament]
Notes:
No money can be appropriated (issued or drawn) out of Consolidated fund of India except in accordance with a parliamentary law.
2. Which among the following correctly denotes Reserve Money?
[A] Currency in circulation
[B] Currency in Circulation + Other deposits of the General Public with RBI
[C] Currency in circulation + Other deposits of the general Public with RBI + Cash held with the banks
[D] Currency in circulation + Other deposits of the general Public with RBI + Cash held with the banks + Banker’s Deposits with RBI
Show Answer
Correct Answer: D [Currency in circulation + Other deposits of the general Public with RBI + Cash held with the banks + Banker’s Deposits with RBI]
Notes:
Reserve money is also called High Powered Money / central bank money. It is the Currency in Circulation plus Deposits of Commercial Banks with RBI.
3. Rs. 100 notes are printed in which of the following?
[A] The Indian Security Press Nasik
[B] The Security Printing Press Hyderabad
[C] The bank Note Press, Dewas
[D] All1,2&3
Show Answer
Correct Answer: D [All1,2&3]
Notes:
The currency notes in India are printed in 4 presses. Two of them are owned by the Government of India and are located at Nashik and Devas. Two others are owned by the Reserve Bank of India at Mysore and Salboni.
4. Expenditures of the central government on flagship development programmes comes under which of the following?
[A] Plan expenditures
[B] Non Plan expenditures
[C] Revenue expenditures
[D] Capital expenditures
Show Answer
Correct Answer: A [Plan expenditures]
Notes:
Plan expenditures refer to the money that is spent by a government or other organization on specific plans or projects. These plans or projects are typically designed to achieve specific goals or objectives, and the plan expenditures are used to fund the activities and operations associated with implementing those plans.
5. With which of the following WIPO is related to ?
[A] Investment
[B] Intellectual property
[C] International trade
[D] Indigenous people
Show Answer
Correct Answer: B [Intellectual property]
Notes:
WIPO-World Intellectual Property Organization
6. Which among the following phrases generally denotes National Income?
[A] Gross National Product at Market Prices
[B] Net National Product at Market Prices
[C] Gross National Product at Factor Cost
[D] Net National Product at Factor Cost
Show Answer
Correct Answer: D [Net National Product at Factor Cost]
Notes:
Net National Product at Factor Cost generally denotes National Income.
7. The Laffer curve is the graphical representation of :
[A] The relationship between tax rates and absolute revenue these rates generate for the government.
[B] The inverse relationship between the rate of unemployment and the rate of inflation in an economy.
[C] The inequality in income distribution
[D] The relationship between environmental quality and economic development.
Show Answer
Correct Answer: A [The relationship between tax rates and absolute revenue these rates generate for the government.]
Notes:
In economics, the Laffer curve is a hypothetical representation of the relationship between government revenue raised by taxation and all possible rates of taxation. It is used to illustrate the concept of taxable income elasticity – that taxable income will change in response to changes in the rate of taxation.
8. Which of the following decides the allocation of the shares in tax proceeds?
[A] Parliament
[B] Finance Commission
[C] Ministry of Finance
[D] Public Accounts Committee
Show Answer
Correct Answer: A [ Parliament ]
Notes:
There are central Taxes on the income and Union excise duties are levied by the Union but are allotted to the states in a prescribed manner. The question is who determines which share is to get how much? This is done by the Parliament. Parliament may take into considerations the recommendations of finance commission.
9. Which of the following statements is correct about the Countervailing duty?
[A] It is the tariff levied on imported goods to offset subsidies offered by the exporting country to its producers
[B] It is the tariff imposed on exported goods to reduce exports and increase the domestic supply
[C] It is the tax levied on revenues received by a corporation, even if it does not make any profit
[D] It is the tax levied on purchase or sale of various financial products like stocks, derivatives, mutual funds etc
Show Answer
Correct Answer: A [ It is the tariff levied on imported goods to offset subsidies offered by the exporting country to its producers ]
Notes:
First option is the correct answer
Countervailing duty is a tariff imposed on imported goods to offset the subsidies offered by the exporting country to its producers. It is imposed to provide level playing field to domestic producers and foreign producers.
10. 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.
