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 fertilizer contains the highest percentage of nitrogen?
[A] Urea
[B] Ammonium nitrate
[C] Calcium nitrate
[D] Calcium ammonium nitrate
Show Answer
Correct Answer: A [Urea]
Notes:
Urea is a white crystalline solid containing about 46% nitrogen. Urea is widely used as a fertilizer and animal feed additive in agriculture. No other solid fertilizer has a higher nitrogen content than urea. Ammonium nitrate contains about 34% nitrogen, calcium ammonium nitrate about 26%, and calcium nitrate about 15.5% nitrogen.
2. 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.
3. When a person has a savings account in a bank, the bank assumes the position of ___?
[A] Debtor
[B] Creditor
[C] Agent
[D] Depositor
Show Answer
Correct Answer: A [Debtor]
Notes:
In a savings account, the customer deposits money with the bank and the bank becomes liable to return that money on demand, subject to the account terms. Since the bank owes the deposited amount to the customer, it is treated as the debtor. The account holder, who has a claim over the deposited funds, is the creditor. This is a basic banker-customer relationship often asked in economics and banking quizzes.
4. Which of the following took birth from the Marrakech Agreement?
[A] World Economic Forum
[B] World Trade organization
[C] OPEC
[D] G-20
Show Answer
Correct Answer: B [World Trade organization]
Notes:
The Marrakesh Agreement, manifested by the Marrakesh Declaration, was an agreement signed in Marrakesh, Morocco, by 123 nations on 15 April 1994, marking the culmination of the 8-year-long Uruguay Round and establishing the World Trade Organization, which officially came into being on 1 January 1995.
5. What is the main objective of RBI's Open Market Operations (OMOs)?
[A] To finance government expenditure directly
[B] To adjust durable liquidity in the banking system
[C] To abolish fiscal deficit
[D] To fix the fiscal year budget
Show Answer
Correct Answer: B [To adjust durable liquidity in the banking system]
Notes:
Open Market Operations are market transactions in government securities undertaken by the RBI to manage liquidity on a durable basis. When the RBI purchases securities, it injects liquidity into the banking system; when it sells, it absorbs liquidity. OMOs are therefore a monetary policy tool for liquidity management, not direct financing of government spending. The core purpose is to keep system liquidity aligned with monetary conditions and financial stability needs.
6. What does the labour force participation rate measure?
[A] The persons who are either employed or actively seeking work
[B] The persons who are employed only
[C] The persons capable to work but not seeking employment
[D] The persons who are neither working nor seeking work
Show Answer
Correct Answer: A [The persons who are either employed or actively seeking work]
Notes:
The labour force participation rate shows the share of the working-age population that is in the labour force. This includes people who are employed as well as those who are unemployed but actively looking for work. It excludes persons who are not working and are not seeking employment. In India, labour force data are primarily measured and published through the Periodic Labour Force Survey (PLFS) conducted by the National Statistics Office under MoSPI.
7. Which of the following best describes a liquidity trap?
[A] Expansionary monetary policy becomes ineffective in stimulating output
[B] Open market operations always increase the rate of interest
[C] Government stops using fiscal policy to control aggregate demand
[D] Banks are forced to liquidate government securities to reduce deficit
Show Answer
Correct Answer: A [Expansionary monetary policy becomes ineffective in stimulating output]
Notes:
A liquidity trap is a situation in which people prefer holding cash and even a monetary expansion fails to reduce interest rates further or boost spending and output. In such a case, conventional monetary policy loses effectiveness in stimulating economic growth. This is why expansionary monetary policy does not work well in a liquidity trap, and policymakers often rely more on fiscal measures to revive demand.
8. 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.
9. Which of the following is India’s first payments bank?
[A] Jio Payments Bank Ltd
[B] Paytm Payments Bank
[C] India Post Payments Bank
[D] Airtel Payments Bank
Show Answer
Correct Answer: D [ Airtel Payments Bank ]
Notes:
Fourth option is the correct answer. Airtel Payments Bank is India’s first payments bank.
10. Which of the following statements is correct about the Countervailing duty?
[A] It is the tariff levied on imported goods to offset subsidies offered by the exporting country to its producers
[B] It is the tariff imposed on exported goods to reduce exports and increase the domestic supply
[C] It is the tax levied on revenues received by a corporation, even if it does not make any profit
[D] It is the tax levied on purchase or sale of various financial products like stocks, derivatives, mutual funds etc
Show Answer
Correct Answer: A [ It is the tariff levied on imported goods to offset subsidies offered by the exporting country to its producers ]
Notes:
First option is the correct answer
Countervailing duty is a tariff imposed on imported goods to offset the subsidies offered by the exporting country to its producers. It is imposed to provide level playing field to domestic producers and foreign producers.
