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. During inflation, how do banks usually set their loan prices?
[A] A decreasing trend
[B] Constant level
[C] No relation to inflation
[D] An increasing trend
Show Answer
Correct Answer: D [An increasing trend]
Notes:
Inflation reduces currency purchasing power and drives general price increases. Banks respond by raising loan prices due to higher costs, including increased wages and operational expenditures. Central banks often hike interest rates during inflation to control rising prices. Higher interest rates result in increased loan pricing by banks to maintain profit margins.
2. First state in India to launch a policy to establish Special Agriculture Zones (SAZs):
[A] Uttar Pradesh
[B] Gujarat
[C] Haryana
[D] Uttarakhand
Show Answer
Correct Answer: D [Uttarakhand]
Notes:
Uttarakhand was the first state to set up Special Agricultural Zones (SAZs) in 2011. It was launched on the lines of the Special Economic Zones (SEZs). It encouraged the farmers to develop high-quality crop seeds typical to hilly regions.
3. Which state led sugarcane production in India in 2023–24?
[A] Uttar Pradesh
[B] Maharashtra
[C] Tamil Nadu
[D] Andhra Pradesh
Show Answer
Correct Answer: A [Uttar Pradesh]
Notes:
Uttar Pradesh contributed over 40% of India’s sugarcane output in the 2023–24 season, with an estimated 220–230 million tonnes. The state consistently leads sugarcane production due to fertile alluvial soil, reliable irrigation from the Ganga basin, and a favorable subtropical climate. Maharashtra ranked second with about 95–100 million tonnes. Data is consistent with figures up to 2024 estimates.
4. Which term refers to a steady rise in prices, income, output, and employment?
[A] Expansion
[B] Boom
[C] Recession
[D] Depression
Show Answer
Correct Answer: A [Expansion]
Notes:
The expansion phase in the business cycle involves sustained increases in GDP, income, output, employment, and often prices. It follows a recovery and precedes a peak. The National Bureau of Economic Research tracks expansion periods in economic cycles. Expansion differs from recession, which indicates economic decline, and from depression, which indicates prolonged downturn.
5. Which among the following imposes a greater burden (relative to resources) on the poor than on the rich ?
[A] Progressive tax
[B] Regressive Tax
[C] Lump Sum tax
[D] Proportional tax
Show Answer
Correct Answer: B [Regressive Tax]
Notes:
A regressive tax is the one in which tax rate decreases as the amount subject to taxation increases; and the tax rate progresses from high to low. The lowest amount is subject to higher taxation and this leads to individuals with low income bear the highest burden of regressive taxes. Such tax does not take into account the ability to pay.
6. Unclaimed deposits are those not operated for how many years?
[A] 5 years or more
[B] 3 years or more
[C] 7 years or more
[D] 10 years or more
Show Answer
Correct Answer: A [5 years or more]
Notes:
Under the Banking Regulation Act, 1949, unclaimed deposits are defined as funds not operated for 10 years in India but commonly considered 5 years under US state dormancy laws. Indian Reserve Bank amendments in 2014 require banks to transfer such amounts to the Depositor Education and Awareness Fund after 10 years.
7. Which option best demonstrates cross-selling in a sales scenario?
[A] A salesperson suggests a premium whisky with local liquor.
[B] A fast-food worker offers fries with a sandwich order.
[C] A salesperson suggests a pricier laptop with upgrades.
[D] A salesperson offers in-car floor liners with a car purchase.
Show Answer
Correct Answer: B [A fast-food worker offers fries with a sandwich order.]
Notes:
Cross-selling involves suggesting additional complementary products to a customer’s original purchase. In fast-food chains, offering fries with a sandwich exemplifies this. According to retail practices adopted since the 1970s, cross-selling combos are widely used to increase overall sales figures. Major restaurant chains such as McDonald’s and Burger King commonly use this technique globally.
8. For the first time in India, in which of the following Budgets “basic reforms in the international financial and trading system ” was stressed in India?
[A] 1969
[B] 1980
[C] 1983
[D] 1984
Show Answer
Correct Answer: C [1983]
Notes:
In the 1983 Budget, Finance Minister R. Venkataraman emphasized “basic reforms in the international financial and trading system” for the first time in India. This was a pivotal moment as it marked a shift towards liberalization and modernization of India’s economy, laying the groundwork for future reforms in the 1990s. The 1983 Budget aimed to address economic challenges and improve India’s global trade position.
9. Consider the following institutions:
- International Monetary Fund
- World Bank
- World Trade Organization
- US Treasury Department
- US Federal Bank
Which among the above institutions were a part of Washington Consensus?
[A] 1 & 2
[B] 1, 2 & 3
[C] 1, 2 & 4
[D] 1, 2, 3 & 4
Show Answer
Correct Answer: C [1, 2 & 4]
Notes:
The Washington Consensus refers to a set of economic policy prescriptions for developing countries, primarily focused on market-oriented reforms. It was formulated in the late 1980s and emphasizes trade liberalization, deregulation, and privatization. While the International Monetary Fund (IMF) and the World Bank are often associated with the Consensus due to their roles in providing financial assistance and policy advice, the World Trade Organization does not embody the trade liberalization aspect central to the Consensus. The US Treasury Department and the US Federal Bank are not a part of the Washington Consensus framework.
10. Which is the biggest borrower in India?
[A] Indian Government
[B] Reserve Bank of India
[C] Indian Railways
[D] State Governments
Show Answer
Correct Answer: A [Indian Government]
Notes:
The Indian central government projected total debt is ₹214.82 lakh crore by March 2027. In FY 2026-27, the government plans to borrow ₹17.2 lakh crore through gross market borrowings. Net market borrowings are projected at ₹11.7 lakh crore. Reserve Bank of India mainly conducts monetary operations and does not borrow such amounts. State governments’ borrowings are lower than the Centre.