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 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.
2. Who published “The Case for Flexible Exchange Rates” in 1953?
[A] John Maynard Keynes
[B] Milton Friedman
[C] Friedrich Lutz
[D] Harry Johnson
Show Answer
Correct Answer: B [Milton Friedman]
Notes:
Milton Friedman published “The Case for Flexible Exchange Rates” in 1953. Friedman’s essay advocated flexible exchange rates to provide monetary policy independence. The paper provided the foundational arguments and theory supporting flexible exchange rate systems over fixed ones. Friedman’s analysis influenced international monetary economics from the 1950s onward.
3. Which among the following will not be an entry in the Profit and Loss account of a bank ?
[A] Interest expense on deposits
[B] Interest earned on advances.
[C] Profit/loss on sale of assets
[D] Income from investment banking related activities
Show Answer
Correct Answer: C [Profit/loss on sale of assets]
Notes:
Profit/loss on sale of assets is an entry in the manufacturing company` s P & L account under the heading other income. In banks the other income includes income from distribution of financial products, income from investment banking related activities, treasury gains and other fee incomes
4. Which are the top three debtors of the World Bank (IBRD)?
[A] India, Brazil, Turkey
[B] Brazil, India, Mexico
[C] India, Turkey, Indonesia
[D] Brazil, Turkey, Philippines
Show Answer
Correct Answer: B [Brazil, India, Mexico]
Notes:
Brazil, India, and Mexico have the highest outstanding IBRD loan commitments as per recent World Bank data. Brazil’s net IBRD commitments lead global figures. India was among the top recipients in 2023, borrowing over 4.3 billion U.S. dollars. Mexico also remains a principal IBRD borrower for infrastructure and development projects in recent years. These three countries routinely top IBRD debt statistics globally.
5. Consider the following statements regarding Cost Push Inflation:
- Cost Push Inflation is a function of the costs such as wages, rent, interest rates etc.
- Cost Push Inflation can be controlled easily in comparison to Demand Pull Inflation.
- The purchasing power of Rupee decreases in case of Cost Push Inflation.
- Cost Push Inflation often results from supply shocks like oil price increases.
Which of the above statements is / are correct?
[A] 1, 3 and 4
[B] Only 1
[C] 1 and 2
[D] 2 and 3
Show Answer
Correct Answer: A [1, 3 and 4]
Notes:
Cost-push inflation arises from increases in production costs like wages and raw materials (statement 1). It cannot be controlled easily compared to demand-pull inflation (statement 2 is incorrect). Inflation reduces the purchasing power of money (statement 3). Supply shocks, e.g., rising oil prices, often trigger cost-push inflation (statement 4). Thus, 1, 3, and 4 are correct.
6. Directorate of Marketing and Inspection (DMI) is an attached Office of which among the following ministries?
[A] Ministry of Food Processing
[B] Ministry of Commerce
[C] Ministry of Agriculture
[D] Ministry of Finance
Show Answer
Correct Answer: C [Ministry of Agriculture]
Notes:
The Directorate of Marketing and Inspection (DMI) operates under the Department of Agriculture, Cooperation, and Farmers Welfare, Ministry of Agriculture and Farmers Welfare. It was established in 1935 and serves as the regulatory body responsible for promoting and regulating marketing and quality control of agricultural and allied products in the country.
7. Economic growth is normally coupled with?
[A] Inflation
[B] Hyper Inflation
[C] Deflation
[D] Stagflation
Show Answer
Correct Answer: A [Inflation]
Notes:
Economic growth results in higher disposable income available with the consumers which increases the overall demand along with the supply available for the consumers. This increase in demand spurs inflation, which eventually becomes a necessary evil for a growing economy.
8. Which among the following bodies regulated the cooperative banks in India?
[A] Reserve Bank of India
[B] Small Industries Development Bank of India
[C] National Bank for Agriculture and Rural Development
[D] National Cooperative Union of India
Show Answer
Correct Answer: A [ Reserve Bank of India ]
Notes:
As per the Cooperative Societies Act, Reserve Bank of India (RBI) regulates the cooperative banks and these are governed by the Banking Regulations Act, 1949 and the Banking Laws (Cooperative Societies) Act, 1965.
9. What must foreign banks do if they miss priority sector lending targets in India?
[A] Deposit shortfall in RIDF
[B] Deposit shortfall with NABARD
[C] Deposit shortfall with RBI
[D] Deposit shortfall with SIDBI for one year
Show Answer
Correct Answer: D [Deposit shortfall with SIDBI for one year]
Notes:
Foreign banks in India failing to meet priority sector lending targets must deposit the shortfall with SIDBI for one year as per RBI guidelines. Domestic banks deposit shortfalls in the Rural Infrastructure Development Fund under NABARD. The RBI’s 2020 guidelines specify a 40 percent lending target for foreign banks with 20 or more branches in India, based on their Adjusted Net Bank Credit.
10. Which among the following is the primary difference between a free trade area and a customs union?
[A] members of a free trade area adopt a common set of barriers for trade between the members
[B] a free trade area is considered a trade bloc and a customs union is not
[C] members of a customs union adopt a common set of external trade barriers
[D] a free trade area can include parts of a country and a customs union includes entire countries
Show Answer
Correct Answer: C [ members of a customs union adopt a common set of external trade barriers ]
Notes:
The primary difference between a free trade area and a customs union is that members of a customs union adopt a common set of external trade barriers. In a free trade area, member countries eliminate tariffs among themselves but maintain their own external tariffs. Examples include NAFTA (now USMCA) as a free trade area and the European Union as a customs union, which has a unified external tariff policy.