Indian Economy MCQs

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Currency depreciation is the loss of value of a country’s currency with respect to one or more foreign reference currencies. This is a term used in floating exchange rate system, where the exchange rates of a currency are market driven and not fixed by the country’s central bank.

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Dear money is available at exceptionally high rate of interest and cheap money is available at very low rates

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Agricultural and Processed Food Products Export Development Authority (APEDA) is an apex body under the Ministry of Commerce and Industry, Government of India, responsible for the export promotion of agricultural products. Its headquarters are located in New Delhi. It is a statutory body established under the Agricultural and Processed Food Products Export Development Authority Act passed by the Parliament in December, 1985.

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The correct answer is “Lowering reserve requirements / increasing volume of reserves”, because lowering reserve requirements allows banks to lend a larger proportion of their deposits, thereby increasing the money multiplier, while increasing the volume of reserves gives banks more funds to create loans and deposits; together, these actions expand the deposit component of the money supply.

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The correct answer is Frictional unemployment. This type occurs when individuals are temporarily unemployed while transitioning between jobs or searching for new employment. It reflects the time taken for job seekers to find a position that matches their skills and preferences. Frictional unemployment is a natural part of a healthy economy, as it indicates mobility in the labor market. According to the U.S. Bureau of Labor Statistics, frictional unemployment typically accounts for about 2-3% of the total unemployment rate.

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Government spending refers to the money spent by the government or public sector on the acquisition of goods and services such as education, healthcare, social protection, defence etc. It does not come under monetary policy.

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Under the Reserve Bank – Integrated Ombudsman Scheme, 2021, the Executive Director in charge of the Consumer Education and Protection Department of RBI is the appellate authority for appeals against Banking Ombudsman decisions. Appeals must be filed within 30 days through the RBI portal or email. Previous schemes listed the Deputy Governor, but the current scheme specifies the Executive Director.

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The Reserve Bank of India requires commercial banks to maintain CRR exclusively as deposits with the RBI. The CRR rate is announced by RBI’s monetary policy. As of June 2024, the CRR for Indian banks is 4.5% of Net Demand and Time Liabilities. No interest is paid by RBI on the CRR amount held. Government securities are held under SLR, not CRR.

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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.

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In 2025, India ranks second worldwide in cotton production, producing about 5.1 million tonnes. China ranks first with 7.5 million tonnes. India accounts for 20% of world cotton production and leads in total cotton cultivation area, covering 38% of the world’s cotton-growing land. The expected output for 2025-26 in India is around 23.5-24.5 million bales.