Indian Economy MCQs

Notes:
David Ricardo, an English classical economist, developed the law of rent in 1809. He presented the law in his book On the Principles of Political Economy and Taxation in 1821.
Ricardo’s theory defined rent as the portion of the earth’s produce that is paid to the landlord for the original and indestructible powers of the soil. In other words, rent is the price paid for the use of land.
Ricardo developed his theory to explain the origin and nature of economic rent. He used the economy and rent to analyze the large rise in corn and land prices during the Napoleonic wars (1805-1815).
The term “Ricardian rent” comes from Ricardo’s theory.

Notes:
In the year 1924, the practice of presenting the railway budget separately from the general budget (or vice versa in true sense) started in India.

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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.

Notes:
RBI’s revised PCA framework for scheduled commercial banks focuses on three broad parameters: capital, asset quality and leverage. The trigger indicators include capital ratios such as CRAR and CET1, net NPA ratio, and leverage ratio. Return on assets is not part of the current trigger set, and the leverage-related trigger is framed as a low Tier 1 leverage ratio. Therefore, among the given options, low Tier 1 leverage ratio is not a non-trigger; the other three are used as PCA trigger indicators.

Notes:
The BSE SENSEX consists of 30 large, actively traded stocks. As of January 2026, BSE’s total market capitalization was approximately $5,001.331 billion. Historically, SENSEX 30 stocks account for around 30% of the BSE’s total market capitalization. The SENSEX was established in 1986 and is the primary benchmark index of the Bombay Stock Exchange.

Notes:
Miadi Hundi, also known as Muddati Hundi, is payable after a specified period. A usance bill of exchange is a negotiable instrument also payable after a certain period, not on demand. Unlike Darshani Hundi, which is payable at sight, Miadi Hundi and usance bills both provide deferred payment terms for commercial transactions.

Notes:
An increase in any of the reverse repo rate, cash reserve ratio, statutory liquidity ratio, or bank rate reduces liquidity or increases borrowing costs for banks, leading to higher market interest rates. All four are contractionary monetary tools used by central banks to moderate inflation and control credit growth by tightening monetary conditions.

Notes:
Reserve Tranche Position (RTP) refers to a member country’s access to its quota in the International Monetary Fund (IMF). Each member can withdraw a portion of its quota without stringent conditions, known as the reserve tranche. This mechanism allows countries to access funds quickly during balance of payments crises. The RTP is crucial for maintaining liquidity in the global economy.

Notes:
Anhydrous ammonia contains about 82% nitrogen by weight. It is a gaseous fertilizer used primarily in large-scale commercial agriculture. It was first used as a fertilizer in the early twentieth century. Anhydrous ammonia must be stored under high pressure or at low temperature to remain in liquid form for application. It is injected into the soil to minimize loss through volatilization.

Notes:
Interval funds are a hybrid of open-ended and closed-ended funds. They allow continuous purchases but restrict redemptions to specific intervals, usually monthly or quarterly. Redemptions are permitted only during these fixed periods. The Securities and Exchange Commission (SEC) regulates these funds in the United States. Interval funds are different from daily-liquid mutual funds.