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 of the following is/are Money Market Instruments?
[A] Treasury Bills
[B] Commercial Papers
[C] Certificate of Deposits
[D] All of the above
Show Answer
Correct Answer: D [All of the above]
Notes:
Money market securities are debt issues with maturities of one year or less. Treasury Bills, Certificate of Deposit as well as Commercial papers are money market instruments.
2. Which among the following would most likely follow if the Reserve Bank of India effects selling of the securities?
[A] The cash resources at the disposal of the commercial banks increase.
[B] The cash resources at the disposal of the commercial banks get diminished.
[C] The cash resources of the commercial banks remain unchanged
[D] None of the above
Show Answer
Correct Answer: B [The cash resources at the disposal of the commercial banks get diminished.]
Notes:
The Reserve Bank of India starts selling the Government Securities, on behalf of the Government. Either the commercial banks or retail investors buy the securities, resulting in decrease of cash resources at the disposal of the commercial banks.
3. Which of the following is an example of a progressive tax?
[A] Customs duty
[B] Sales tax
[C] Excise duty
[D] Income tax
Show Answer
Correct Answer: D [Income tax]
Notes:
Income tax was introduced in India in 1860 by Sir James Wilson. Income tax rates in India increase with higher income slabs as per the Finance Act. The income tax structure is defined in the Income Tax Act, 1961. Income tax collection is administered by the Central Board of Direct Taxes. A progressive tax system is implemented where tax liability rises as an individual’s income increases, with no fixed single rate for all.
4. National Rural Credit Stabilization Fund is a Institution of purpose-specific funds in which of the following?
[A] IDBI
[B] SIDBI
[C] IFCI
[D] NABARD
Show Answer
Correct Answer: D [NABARD]
Notes:
The National Rural Credit stabilization fund is a sector specific finds maintained with National Bank for Agriculture and Rural Development. This fund includes contributions from Central and State Governments, sums contributed by RBI and the sums contributed by NABARD’s board every year.
5. Which organization aids members in balance of payments problems?
[A] World Bank
[B] International Monetary Fund
[C] Asian Development Bank
[D] World Economic Forum
Show Answer
Correct Answer: B [International Monetary Fund]
Notes:
The International Monetary Fund was created in 1944 at the Bretton Woods Conference. Its main function is to provide temporary financial assistance to member countries facing balance of payments deficits. The IMF uses facilities like Stand-By Arrangements and Extended Fund Facility. Membership includes 190 countries as of 2023. The IMF also conducts economic surveillance and policy advice, but direct financial support for balance of payments stability is its core function.
6. If the people prefer to keep cash with them rather than deposits, which among the following impacts will be seen on the Money Supply of the country?
[A] The money supply of the country will increase
[B] The money supply of the country will decrease
[C] The money supply of the country will not change
[D] The money supply of the country may increase or decrease
Show Answer
Correct Answer: B [The money supply of the country will decrease]
Notes:
If people prefer to keep cash with them rather than making deposits in banks, the impact on the Money Supply of the country will be as follows:
[B] The money supply of the country will decrease.
The reason for this is that money supply is typically categorized into different measures, with M1 and M2 being common examples. M1 includes currency (physical cash) in circulation and demand deposits (checking accounts). When people hold more cash and make fewer deposits, it reduces the amount of money in demand deposits, which are considered a part of the money supply. Therefore, if people choose to keep more cash on hand, it reduces the overall money supply in the country, leading to a decrease.
7. Note Printing Press that belongs to RBI is located in?
[A] Nasik
[B] Dewas
[C] Mysore
[D] Chennai
Show Answer
Correct Answer: C [Mysore]
Notes:
The Reserve Bank of India (RBI) has two currency printing presses in India: Mysore, Karnataka and Salboni, West Bengal.
The RBI’s presses are owned by Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL), a subsidiary of the Reserve Bank. The other two currency presses in India are owned by the government and are located in Nasik and Dewas.
8. Which among the following bank had issued first successful Credit Card of the world?
[A] Bank of America
[B] Standard Chartered Bank
[C] CitiBank
[D] ANZ Grindlays Bank
Show Answer
Correct Answer: A [Bank of America]
Notes:
The first successful credit card was issued by Bank of America in 1950. It was called the “BankAmericard,” which later evolved into Visa. This innovation revolutionized consumer credit and payment systems, paving the way for modern credit cards.
9. Which term refers to the maximum capital a company can raise in its lifetime?
[A] Authorized Capital
[B] Registered Capital
[C] Nominal Capital
[D] All of the above
Show Answer
Correct Answer: D [All of the above]
Notes:
Authorized capital is the maximum share capital stated in a company’s Memorandum of Association. Registered capital and nominal capital are alternate terms for authorized capital. This ceiling cannot be exceeded without shareholder approval and modification in company documents as per the Companies Act, 2013.
10. The Financial Action Task Force (FATF) is an initiative of:
[A] SAARC
[B] IMF
[C] BRICS
[D] G7 countries
Show Answer
Correct Answer: D [ G7 countries ]
Notes:
The Financial Action Task Force (FATF) is an inter-governmental body established in 1989 by the Member of G7. The FATF has developed a series of Recommendations that are recognised as the international standard for combating of money laundering and the financing of terrorism and proliferation of weapons of mass destruction. Group of 7 (G7) is a group consisting of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.
