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. In which year was India’s first Five-Year Plan launched?
[A] 1950
[B] 1953
[C] 1951
[D] 1952
Show Answer
Correct Answer: C [1951]
Notes:
India’s first Five-Year Plan was launched in 1951 under Prime Minister Jawaharlal Nehru. The plan focused on the development of the agricultural sector. The Planning Commission was officially constituted on 15 March 1950. The plan period lasted from 1951 to 1956. The plan was based on the Harrod-Domar model. The final draft was presented to the Parliament and given approval by the National Development Council.
2. Round-tripping is associated with which of the following?
[A] Capital Markets
[B] Foreign Direct Investments
[C] Cash Deposits
[D] Foreign Remittances
Show Answer
Correct Answer: B [Foreign Direct Investments]
Notes:
Round-tripping involves domestic funds sent abroad and returning as foreign direct investment (FDI), often through offshore financial centers like Mauritius and Cyprus. India has observed FDI inflows suspected to involve round-tripping, especially in the 2000s and 2010s. The Department for Promotion of Industry and Internal Trade monitors FDI trends. Round-tripping bypasses tax regulations on FDI in multiple countries, including India.
3. A good that is non-rivalries and non-excludable, and whose benefits can not be prices and therefore to which the principle of exclusion does not apply comes under the following heading?
[A] Pure Private Goods
[B] Pure Public Goods
[C] Pure Free Goods
[D] Pure Market Goods
Show Answer
Correct Answer: B [Pure Public Goods]
Notes:
Pure public goods are goods or services that are both non-excludable and non-rivalrous in consumption. Non-excludable means that it is impossible to prevent anyone from using the good or service, once it is provided. Non-rivalrous means that one person’s use of the good or service does not diminish its availability to others. Examples of pure public goods include national defense, clean air, and knowledge. Because pure public goods are both non-excludable and non-rivalrous, they are often provided by the government, since it is difficult for private businesses to exclude people from using them or to charge them for their use.
4. From time to time, which among the following body publishes the “Exchange Control Manual” in context with the Foreign Exchange in India?
[A] Foreign Trade Promotion Board
[B] Department of Commerce
[C] Reserve Bank of India
[D] SEBI
Show Answer
Correct Answer: C [Reserve Bank of India]
Notes:
The correct answer is the Reserve Bank of India (RBI). The RBI is responsible for regulating foreign exchange in India under the Foreign Exchange Management Act (FEMA) of 1999. The “Exchange Control Manual” provides guidelines for foreign exchange transactions and is crucial for maintaining the stability of the Indian economy. The RBI also plays a key role in managing the country’s foreign exchange reserves and ensuring compliance with international financial regulations.
5. Approval of which among the following is needed to draw funds from Consolidated Fund of India?
[A] President
[B] Parliament
[C] Council of Ministers
[D] All the above
Show Answer
Correct Answer: B [Parliament]
Notes:
The Consolidated Fund of India was created under Article 266 of the Indian Constitution. The government meets all its expenditure from this fund and it needs parliamentary approval to withdraw money from this fund.
6. Which action increases cash reserves of commercial banks by RBI?
[A] Release gold from its reserves
[B] Purchase government securities in open market operations
[C] Prohibit bills of exchange transactions
[D] Increase IMF tranche reserves
Show Answer
Correct Answer: B [Purchase government securities in open market operations]
Notes:
The Reserve Bank of India increases cash reserves of commercial banks by purchasing government securities through open market operations. When government securities are purchased, funds are transferred to commercial banks, raising their cash reserves. OMOs are used by the RBI as a monetary policy instrument to regulate liquidity and money supply. As of 2023, RBI actively uses OMOs to manage system liquidity.
7. Consider the following statements regarding the classification of government expenditure in India prior to 2017-18:
- Subsidies were classified under non-plan expenditures of the government.
- Interest payments and debt servicing were classified under non-plan expenditures of the government.
- Defence expenditures were classified under non-plan expenditures of the government.
Which of the above statements is/are correct?
[A] Only 1
[B] 1 and 2 only
[C] 2 and 3 only
[D] 1, 2 and 3
Show Answer
Correct Answer: D [1, 2 and 3]
Notes:
All three statements are correct. Before 2017-18, the government’s non-plan expenditure included subsidies, interest payments and debt servicing, and defence expenditures. Non-plan expenditures covered routine and obligatory expenses such as salaries, pensions, subsidies, interest, defence outlays, and grants. From 2017-18 onward, the classification was replaced by Revenue and Capital expenditure categories.
8. Which among the following represents a fall in the prices?
- Stagflation
- Disinflation
- Deflation
Select the correct option from the codes given below:
[A] Only 1 & 2
[B] Only 2 & 3
[C] Only 3
[D] Only 2
Show Answer
Correct Answer: C [ Only 3 ]
Notes:
Stagflation, as you might know is a condition when economy isn’t growing but prices are. So, this option would be opted out. Next two are disinflation and deflation. Disinflation means rise in prices has slowed down significantly as compared with the previous year. This simply implies that prices don’t fall during disinflation also. Deflation is when the prices actually fall. Kindly note that deflation usually moves hand in hand with economic slowdown, lower productivity and loss of employments.
9. Which Ministry set “Haat to Hypermarket” as the Rural Business Hubs’ objective?
[A] Ministry of Panchayati Raj
[B] Ministry of Corporate Affairs
[C] Ministry of Skill Development and Entrepreneurship
[D] Ministry of Rural Development
Show Answer
Correct Answer: A [Ministry of Panchayati Raj]
Notes:
The Ministry of Panchayati Raj launched the Rural Business Hubs (RBH) initiative in 2007. The “Haat to Hypermarket” objective aims to connect rural producers to wider markets. The ministry focuses on rural empowerment through economic partnerships and market linkages for local artisans. RBH projects involve village industries, micro-enterprises, and cooperatives under the ministry’s schemes.
10. When will the full Mumbai-Ahmedabad bullet train corridor be operational?
[A] 2026
[B] 2027
[C] 2029
[D] 2030
Show Answer
Correct Answer: C [2029]
Notes:
The Mumbai-Ahmedabad High-Speed Rail corridor is a 508-kilometer project using Japan’s Shinkansen technology, featuring 12 stations across Maharashtra, Gujarat, and Dadra and Nagar Haveli. The National High Speed Rail Corporation Ltd. manages the project. As per official schedules, phased operations begin in 2027, with full end-to-end corridor operations targeted for 2029.