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 organization administered LIBOR until its cessation?
[A] ICE Benchmark Administration (IBA)
[B] Bank of England
[C] European Banking Federation
[D] European Central Bank
Show Answer
Correct Answer: A [ICE Benchmark Administration (IBA)]
Notes:
ICE Benchmark Administration (IBA) was the authorised and regulated administrator of LIBOR from February 2014 until the benchmark ceased in September 2024. LIBOR is no longer published, as all settings permanently ended on 30 September 2024. Therefore, IBA is the correct organization associated with administering LIBOR until its cessation. The other options are not responsible for LIBOR administration.
2. Which city hosts the world's largest foreign exchange market?
[A] New York
[B] Singapore
[C] Tokyo
[D] London
Show Answer
Correct Answer: D [London]
Notes:
London is the world’s largest foreign exchange trading centre. In the Bank for International Settlements’ latest Triennial Central Bank Survey, it accounted for the biggest share of global FX turnover, ahead of New York, Singapore and Tokyo. The city’s dominance is supported by its strong financial infrastructure, concentration of major banks, and time-zone advantage, which allows trading overlap with both Asian and American markets.
3. With reference to the Union Budget of India, the expenditure classification follows which of the following broad categories?
[A] Revenue expenditure and Capital expenditure
[B] Plan expenditure and Non-Plan expenditure
[C] Developmental expenditure and Non-developmental expenditure
[D] Borrowed expenditure and Tax-funded expenditure
Show Answer
Correct Answer: A [Revenue expenditure and Capital expenditure]
Notes:
From Budget 2017-18 onward, the Government of India did away with the Plan and Non-Plan classification of expenditure. The budget now uses the more standard and meaningful classification into Revenue expenditure and Capital expenditure, which better reflects the nature of government spending.
4. In context with the macroeconomics , Philips Curve is a relationship between the rates of ___?
[A] Unemployment & Exim trade
[B] Unemployment and Inflation
[C] Unemployment and Demand
[D] Unemployment and Poverty
Show Answer
Correct Answer: B [Unemployment and Inflation]
Notes:
Phillips curve developed by A. W. Phillips says that the inflation and unemployment have a stable and inverse relationship; which means that higher inflation is associated with lower unemployment and vice versa. However, later it was proved that this curve is applicable only in the short-run, and in long-run, inflationary policies would not decrease unemployment.
5. Which of the following is not a core principle of progressive taxation?
[A] Ability to pay
[B] Equity and redistribution
[C] Vertical fairness
[D] Administrative convenience
Show Answer
Correct Answer: D [Administrative convenience]
Notes:
Progressive taxation is designed around the ability-to-pay principle, where taxpayers with higher incomes contribute at higher rates. Its main goals include equity, vertical fairness, and redistribution of income toward a more balanced tax burden. Administrative convenience is a useful feature of any tax system, but it is not considered a core principle of progressive taxation itself. Therefore, the correct answer is administrative convenience.
6. The term “cartelization” is mainly linked with which of the following groups?
[A] Small traders in local markets
[B] Independent firms formally agreeing to cooperate
[C] Individual investors in competitive markets
[D] Government-regulated monopolies
Show Answer
Correct Answer: B [Independent firms formally agreeing to cooperate]
Notes:
Cartelization describes independent firms entering formal agreements to control prices, limit supply, or divide markets. It typically involves actions such as price fixing or market-sharing. Cartelization is prohibited under the Competition Act, 2002 in India. In 2022, India’s Competition Commission imposed penalties on cement companies for cartelization. Cartels are illegal in many countries and are monitored by regulatory bodies to ensure market competition.
7. Which statement about White Label ATMs is correct?
[A] ATMs owned by foreign companies
[B] ATMs owned by private ATM service providers, not banks
[C] ATMs outsourced by banks with sponsor branding
[D] ATMs owned by the government
Show Answer
Correct Answer: B [ATMs owned by private ATM service providers, not banks]
Notes:
White Label ATMs in India are owned and operated by non-banking entities authorized by the Reserve Bank of India since 2012. These ATMs do not display any bank logo and can be used by customers of any bank for basic transactions. Tata Communications Payment Solutions was the first company to set up White Label ATMs under the ‘Indicash’ brand in India.
8. Which price index measures headline inflation in India?
[A] GDP Deflator
[B] WPI
[C] CPI (Combined)
[D] CPI-IW
Show Answer
Correct Answer: C [CPI (Combined)]
Notes:
In India, headline inflation for monetary policy and general price monitoring is measured using the all-India Consumer Price Index (CPI), specifically CPI (Combined). MoSPI releases CPI for Rural, Urban and Combined sectors, and inflation is usually calculated as the year-on-year change in CPI. The Reserve Bank of India uses CPI headline inflation as its main inflation indicator for policy decisions, not WPI or CPI-IW.
9. In what form do banks maintain the Cash Reserve Ratio (CRR)?
[A] Government Securities
[B] Physical Cash in Hand
[C] Deposits with the Reserve Bank of India
[D] A Combination of Cash and Government Securities
Show Answer
Correct Answer: C [Deposits with the Reserve Bank of India]
Notes:
Cash Reserve Ratio (CRR) is the portion of a bank’s Net Demand and Time Liabilities that must be kept as cash balances with the Reserve Bank of India. It is maintained only as a deposit with the RBI, not in government securities or cash held by the bank. The CRR rate is decided by the RBI under its monetary policy framework and can be changed from time to time. This requirement helps the central bank regulate liquidity in the banking system.
10. What is the primary operational role of MUDRA (SIDBI) Bank?
[A] Provide direct loans to micro enterprises up to ₹10 lakh
[B] Undertake refinance and support services like portal management and data analysis
[C] Establish foreign direct investment channels for Indian MSMEs
[D] Finance only high-growth manufacturing startups
Show Answer
Correct Answer: B [Undertake refinance and support services like portal management and data analysis]
Notes:
MUDRA (SIDBI) Bank operates as a refinance agency primarily providing refinance support to banks, MFIs, and NBFCs for lending to micro and small enterprises. It also provides support services such as management of financing portals and data analysis. It does not directly lend to micro enterprises. MUDRA Bank operates under the Pradhan Mantri MUDRA Yojana scheme since its formation in 2015.
