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. Which among the following is considered to be the best measure of an increase in a country’s economic efficiency?
[A] Increase in annual private investment
[B] Increase in real national income
[C] Increase in real per capita income
[D] Increase in net annual investment
Show Answer
Correct Answer: C [Increase in real per capita income]
Notes:
Per capita income is a measure of the average income earned per person in a given area (usually in a country) in a particular year. When this figure is adjusted for inflation, the real per capita income is obtained, which gives the best measure of an increase in a country’s economic efficiency.
2. Which fertilizer contains the highest percentage of nitrogen?
[A] Urea
[B] Ammonium nitrate
[C] Calcium nitrate
[D] Calcium ammonium nitrate
Show Answer
Correct Answer: A [Urea]
Notes:
Urea is a white crystalline solid containing about 46% nitrogen. Urea is widely used as a fertilizer and animal feed additive in agriculture. No other solid fertilizer has a higher nitrogen content than urea. Ammonium nitrate contains about 34% nitrogen, calcium ammonium nitrate about 26%, and calcium nitrate about 15.5% nitrogen.
3. What is dematerialization of securities in financial markets?
[A] The shortening of debt repayment periods on bonds
[B] Repurchase of outstanding shares by a company
[C] Conversion of physical share certificates into electronic format
[D] Prevention of share prices from falling below a minimum
Show Answer
Correct Answer: C [Conversion of physical share certificates into electronic format]
Notes:
Dematerialization means holding securities in electronic form instead of physical certificates. In India, shares and other eligible securities are credited to demat accounts through depository systems, which makes transfer and settlement faster and safer. It also reduces risks such as loss, theft, forgery, and bad delivery. This concept is widely used in modern capital markets and is an important part of securities trading and settlement infrastructure.
4. What is the main reason companies issue sweat equity shares?
[A] To provide more profits to retail investors
[B] To reduce cash flow requirements for compensation
[C] To retain and attract top talent via ownership stakes
[D] To save taxes on employee compensation
Show Answer
Correct Answer: C [To retain and attract top talent via ownership stakes]
Notes:
Sweat equity shares are offered to employees or directors for their work or know-how, as per Section 54 of the Companies Act, 2013. Such shares are issued to retain and attract skilled personnel by granting ownership stakes without immediate cash outflow. SEBI regulates sweat equity issuance for listed companies. Companies often use sweat equity during initial stages to incentivize and retain employees without cash expenditure.
5. Ad valorem tax is levied on which of the following?
[A] The price of a commodity
[B] The value added to a product
[C] The assessed value of property or transaction
[D] The unit of the commodity
Show Answer
Correct Answer: C [The assessed value of property or transaction]
Notes:
Ad valorem tax is calculated as a percentage of the assessed value of property or transaction. Sales tax, property tax, and import duties are common examples. This tax is proportional to the value, not a fixed amount per unit. The term originates from Latin meaning “according to value.” The assessed value is used to determine the actual tax liability.
6. Consider the following statements regarding Exchange Earners’ Foreign Currency (EEFC) Accounts:
- They are maintained with the Reserve Bank of India (RBI)
- They earn interest on deposits
- Authorized dealer banks may prescribe a suitable minimum balance
- They are non-interest bearing current accounts maintained with authorized dealer banks
Which of the above statements is / are correct?
[A] Only 1
[B] 1 and 2
[C] Only 4
[D] 2 and 3
Show Answer
Correct Answer: C [Only 4]
Notes:
EEFC accounts are foreign currency current accounts maintained by eligible exchange earners with authorized dealer Category-I banks, not with the RBI. These accounts do not earn interest. RBI allows such accounts to be non-interest bearing and permits authorized dealer banks to fix a suitable minimum balance requirement. Hence, statement 4 is correct, while statements 1 and 2 are incorrect. Statement 3 is also not correct as a universal rule because the minimum balance, if prescribed, is decided by the bank.
7. Measuring of core inflation rate, excludes commodities like:
- Food
- Crude Oil
- Precious metals
- Livestock and meat
Select the correct option from codes given below:
[A] 1 & 2 Only
[B] 1, 2 & 3 Only
[C] 3 & 4 Only
[D] 1, 2 & 4 Only
Show Answer
Correct Answer: D [1, 2 & 4 Only]
Notes:
Core inflation is a measure of inflation that excludes certain items that face volatile price movements. It excludes transitory or temporary price volatility as in the case of some commodities such as food items, energy products etc.
8. Consider the following statements regarding the proposed Wholesale & Long-Term Finance Banks (WLTF):
- They cannot accept saving deposits.
- They will raise funds by issuing rupee denominated bonds, locally as well as abroad.
- They are required to maintain 40 percent of their branches in rural areas.
Which of the above statements is / are correct?
[A] Only 2 and 3
[B] Only 1 and 3
[C] Only 1 and 2
[D] 1, 2 and 3
Show Answer
Correct Answer: C [Only 1 and 2]
Notes:
The first and second statements are correct: WLTF banks cannot accept saving deposits and may raise funds via rupee denominated bonds both locally and abroad. The third is incorrect: WLTF banks are exempt from maintaining a mandatory branch network in rural areas, differing from universal banks, and thus have no such requirement.
9. Courier service comes under which of the following sectors?
[A] Primary
[B] Secondary
[C] Both Secondary and Tertiary
[D] Tertiary
Show Answer
Correct Answer: D [Tertiary]
Notes:
The tertiary industry is the segment of the economy that provides services to its consumers, including a wide range of businesses such as financial institutions, schools and restaurants. It is also known as the tertiary sector or service industry/sector.
10. In which of the following market forms a firm does not exercise control over price?
[A] Monopoly
[B] Mixed Competition
[C] Perfect competition
[D] Oligopoly
Show Answer
Correct Answer: C [Perfect competition]
Notes:
In economics, specifically general equilibrium theory, a perfect market is defined by several idealizing conditions, collectively called perfect competition.
