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. Planning Commission of India was established by which among the following means?
[A] Act of Parliament
[B] Presidential Order
[C] Presidential Ordinance
[D] Cabinet Resolution
Show Answer
Correct Answer: D [Cabinet Resolution]
Notes:
The Planning Commission was set up by a Cabinet Resolution of the Government of India in March 1950. Jawaharlal Nehru was the first Chairman of the Planning Commission. It had the responsibility to formulate plans to utilize the available resources.
2. Which among the following ratios correctly denotes Money Multiplier?
[A] M3: M0
[B] M1: M3
[C] M3: M1
[D] M1: M0
Show Answer
Correct Answer: A [M3: M0]
Notes:
Money multiplier is expressed as a ratio between broad money (M3) and Reserve money (M0). It refers to how an initial deposit can lead to a bigger final increase in the total money supply.
3. Which among the following is the main function of Agricultural Finance Corporation Limited ?
[A] consultancy services in the field of agriculture
[B] social service organization
[C] Agricultural commodities exchange
[D] Agricultural cooperative society
Show Answer
Correct Answer: A [consultancy services in the field of agriculture]
Notes:
Agricultural Finance Corporation Limited (AFC) is a development organization that provides consulting, advisory, and implementation support for agriculture and rural development in India. AFC was established in 1968 by India’s banking industry.
4. What is a key financial power of the World Bank?
[A] The right to set pegged currency parities
[B] The right to issue bonds for development loans
[C] The right to purchase gold below market rate
[D] All of the above
Show Answer
Correct Answer: B [The right to issue bonds for development loans]
Notes:
The World Bank has issued bonds in global markets since 1947. Bonds are issued in various currencies and formats, including domestic and Eurobonds. Funds raised through these bonds finance development loans and projects in member countries. The World Bank holds triple-A credit ratings by Moody’s and S&P. Over 180 member countries are eligible for World Bank development financing.
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. Directorate of Marketing and Inspection (DMI) is an attached Office of which among the following ministries?
[A] Ministry of Food Processing
[B] Ministry of Commerce
[C] Ministry of Agriculture
[D] Ministry of Finance
Show Answer
Correct Answer: C [Ministry of Agriculture]
Notes:
The Directorate of Marketing and Inspection (DMI) operates under the Department of Agriculture, Cooperation, and Farmers Welfare, Ministry of Agriculture and Farmers Welfare. It was established in 1935 and serves as the regulatory body responsible for promoting and regulating marketing and quality control of agricultural and allied products in the country.
7. The power of banks to expand deposits through lending is called:
[A] Capital Expansion
[B] Credit Expansion
[C] Credit Control
[D] Credit Creation
Show Answer
Correct Answer: D [Credit Creation]
Notes:
Credit creation by commercial banks occurs under the fractional reserve system. Banks keep a part of deposits as reserves and lend the rest. This process increases the total supply of money. The cash reserve ratio (CRR) determines the amount banks must retain. The money multiplier is calculated as 1 divided by the CRR. New loans are redeposited and re-lent, multiplying deposits.
8. Consider the following:
- Short Term Funds
- Medium Term Funds
- Long Term Funds
Which among the above is/ are dealt in the Indian Capital Market?
[A] 1 & 2
[B] 2 & 3
[C] 1 & 3
[D] 1, 2 & 3
Show Answer
Correct Answer: B [2 & 3]
Notes:
Short Term Funds – Indian Money Market,
Medium and Long Term Funds- Indian Capital Market
9. What does Revenue Neutral Rate (RNR) mean?
[A] A policy where revenue receipts equal revenue expenditures
[B] A tax rate to ensure income tax equity
[C] A property tax rate generating same revenue as previous year
[D] A tax policy increasing revenue without hearings
Show Answer
Correct Answer: C [A property tax rate generating same revenue as previous year]
Notes:
The Revenue Neutral Rate is a property tax rate calculated so total tax revenue equals the previous year’s amount, based on current assessed property valuations. The formula is previous year’s tax revenue divided by current year’s assessed valuation, multiplied by 1,000. If property values increase, the RNR decreases to keep tax revenue flat.
10. Consider the following statements about “Adopt a Heritage” project:
- It is an initiative by the Ministry of Tourism
- The project aims to include private and public sector for development of tourist destinations in India
Which of the above statements is/are correct?
[A] 1 Only
[B] 2 Only
[C] Both 1 & 2
[D] Neither 1 nor 2
Show Answer
Correct Answer: C [Both 1 & 2]
Notes:
First statement is correct. Adopt a Heritage project is a key initiative of Ministry of Tourism in close collaboration with Ministry of Culture and Archaeological Survey of India (ASI). Second statement is correct. The project aims to entrust heritage sites to the public sector and private sector companies and individuals for the development of tourist amenities. The private, public or individual entities holding the responsibility for development of a tourist site are treated as “Monument Mitras”. The basic and advanced amenities of the tourist destinations are being provided by them. Also, they hold the responsibility to look after the operations and the maintenance of the amenities.
