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. If India’s external commercial borrowings increase, what is the likely macroeconomic impact?
[A] External debt will increase, but macroeconomic impact depends on hedging and exchange rates
[B] External debt will increase, but forex reserves will remain unaffected
[C] External debt will remain unaffected due to RBI’s forward book management
[D] External debt will increase proportionally, with no impact on current account deficit
Show Answer
Correct Answer: A [External debt will increase, but macroeconomic impact depends on hedging and exchange rates]
Notes:
At end-March 2025, India’s outstanding commercial borrowings reached $291.6 billion, a 16.4% rise from the previous year. Increase in ECBs directly raises external debt. Macroeconomic stability varies with hedging costs and exchange rate fluctuations, which can affect inflation and liquidity. The impact is also influenced by RBI’s management of foreign exchange reserves and currency volatility, not only the debt quantum.
2. Which organization currently calculates and publishes LIBOR?
[A] Intercontinental Exchange (ICE) and Refinitiv
[B] Bank of England
[C] European Banking Federation
[D] European Central Bank
Show Answer
Correct Answer: A [Intercontinental Exchange (ICE) and Refinitiv]
Notes:
Intercontinental Exchange (ICE) Benchmark Administration took over LIBOR calculation in 2014. Refinitiv publishes LIBOR data. The British Bankers’ Association managed LIBOR calculations from 1986 until 2014. Discontinuation of LIBOR was announced in 2017, with USD, EUR, CHF, and JPY LIBOR ceasing in phases between 2021 and 2023. ICE and Refinitiv are based in the United Kingdom.
3. What is the full form of BOLT in infrastructure financing?
[A] Build, Operate, Lend, Transfer
[B] Build, Operate, Lease, Transfer
[C] Build, Observe, Lend, Transfer
[D] Build, Own, Lease, Transfer
Show Answer
Correct Answer: D [Build, Own, Lease, Transfer]
Notes:
BOLT stands for Build, Own, Lease, Transfer. In this model, a private entity constructs and owns the infrastructure facility, leases it to a government or public sector agency for an agreed period, and afterward transfers ownership to the public authority. The model was adopted to attract private investment in public infrastructure in India from the 1990s and is used in sectors like transportation and power.
4. Which among the following authority decides upon any issues regarding the revision of fee collected as Development Fee from Airports in India?
[A] Airport Authority of India
[B] Airports Economic Regulatory Authority
[C] Ministry of Civil Aviation
[D] Secretary , Ministry of Civil Aviation
Show Answer
Correct Answer: B [Airports Economic Regulatory Authority]
Notes:
The Airports Economic Regulatory Authority (AERA) Bill 2007 ensures that the watchdog monitors performance standards of airports and regulate tariff and other charges for aeronautical services including Airport
5. Which condition does not trigger RBI’s Prompt Corrective Action (PCA) for banks?
[A] High Non-Performing Assets (NPA)
[B] Low Capital Adequacy Ratio (CAR)
[C] Low Return on Assets (RoA)
[D] High Leverage Ratio
Show Answer
Correct Answer: D [High Leverage Ratio]
Notes:
The RBI’s PCA framework mandates intervention if a bank records net NPA above 6%, capital adequacy ratio below 9%, or negative return on assets for four years. PCA restrictions include halting dividend payments and branch expansion. A leverage ratio above 25 times Tier 1 capital also triggers PCA. Leverage ratio measures a bank’s core capital relative to its total assets and exposure.
6. What fraction of BSE market capitalization is from BSE SENSEX 30 stocks?
[A] 10%
[B] 20%
[C] 30%
[D] 40%
Show Answer
Correct Answer: C [30%]
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.
7. The act of simultaneous buying and selling of securities, currency, or commodities in different markets or in derivative forms is called _?
[A] Arbitrage
[B] Spot market
[C] Ambush marketing
[D] Futures market
Show Answer
Correct Answer: A [ Arbitrage ]
Notes:
Arbitrage is the process of simultaneous buying and selling of an asset from different platforms, exchanges or locations to cash in on the price difference. While getting into an arbitrage trade, the quantity of the underlying asset bought and sold should be the same. Only the price difference is captured as the net pay-off from the trade.
8. Which of the following is the distribution of the burden of paying a tax?
[A] Sharing of tax burden
[B] Shifting of the tax
[C] Incidence of a tax
[D] Tax capitalization
Show Answer
Correct Answer: C [Incidence of a tax]
Notes:
In economics, tax incidence or tax burden is the effect of a particular tax on the distribution of economic welfare. The introduction of a tax drives a wedge between the price consumers pay and the price producers receive for a product, which typically imposes an economic burden on both producers and consumers.
9. Which of the following rate is charged by banks to their most credit worthy customers?
[A] Prime Lending Rate
[B] Repo Rate
[C] Statutory Liquidity Rate
[D] Bank Rate
Show Answer
Correct Answer: A [Prime Lending Rate]
Notes:
A prime rate or prime lending rate is an interest rate used by banks, usually the interest rate at which banks lend to favoured customers—i.e., those with good credit.
10. Self Help Groups in India are mainly linked to which of these?
[A] Traditional commercial banking loans
[B] World Bank’s microfinance standards
[C] India’s microfinance model for poverty reduction
[D] Direct government cash transfer schemes
Show Answer
Correct Answer: C [India’s microfinance model for poverty reduction]
Notes:
Self Help Groups in India started in the 1970s as informal savings and credit groups. NABARD launched the SHG-Bank Linkage Programme in 1992 to facilitate institutional credit access. By February 2024, over nine million SHGs covered around 100 million women. The repayment rate exceeds 96 percent. SHGs target marginalized women for poverty alleviation and financial inclusion through microfinance activities.