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.
11. What does ‘expropriation’ mean in Foreign Direct Investment (FDI) context?
[A] Government seizes a foreign firm’s property, usually with compensation
[B] Investor acquires property rights in host country
[C] Estimating potential profits and returns from FDI
[D] Government bans profit repatriation to home country
Show Answer
Correct Answer: A [Government seizes a foreign firm’s property, usually with compensation]
Notes:
Expropriation is the act of a government forcibly taking control of assets owned by foreign investors. International law generally requires such action to serve a public purpose, follow due process, and involve prompt, adequate compensation at fair market value. Expropriation may be direct, such as transfer of title, or indirect, such as regulatory measures that remove economic value without actual seizure.
12. What is the minimum CRR rate that the RBI can prescribe for scheduled commercial banks under Section 42(1) of the RBI Act, 1934?
[A] No Limit
[B] 3%
[C] 4%
[D] 6%
Show Answer
Correct Answer: A [No Limit]
Notes:
Under Section 42(1) of the RBI Act, 1934, the Reserve Bank of India may prescribe the Cash Reserve Ratio for scheduled commercial banks without any statutory floor or ceiling. In other words, the law does not fix a minimum or maximum CRR rate. The actual CRR notified by RBI can change from time to time through its circulars and directions, but the enabling provision itself leaves the rate open-ended.
13. Which of the following actions would tighten banks' liquidity position?
[A] Only the central bank selling government securities
[B] Only stricter liquidity regulations that limit deployable funds
[C] Both of the above actions
[D] Only central bank quantitative easing
Show Answer
Correct Answer: C [Both of the above actions]
Notes:
Both actions can tighten banks' liquidity position. When a central bank sells government securities, reserves are drained from the banking system, reducing immediately available funds. Stricter liquidity regulations can also force banks to hold more safe liquid assets or meet higher liquidity buffers, leaving less money available for lending and investment. Quantitative easing does the opposite, because it injects reserves into the system and eases liquidity conditions.
14. Which sector is best described as a ‘Sunrise industry’? (UPSC Prelims 1988)
[A] Traditional agriculture
[B] Coal mining
[C] Cotton textiles
[D] Renewable energy technology
Show Answer
Correct Answer: D [Renewable energy technology]
Notes:
Renewable energy technology is classified as a sunrise industry due to its rapid growth and adoption of emerging technologies. It includes solar, wind, and other clean energy solutions. India ranked fourth globally in installed renewable energy capacity as of 2023. Government initiatives like the National Solar Mission target 175 GW of renewable energy capacity by 2022. Sunrise industries focus on innovation and future economic potential.
15. Who is the autor of the book “Utilitarianism”?
[A] Jermy bentham
[B] Immanuel Kant
[C] J S Mill
[D] David Ricardo
Show Answer
Correct Answer: C [J S Mill]
Notes:
JS mill’s book utilitarianism is a series of articles published in Frazer’s magazine. Mill’s aim in the book is to explain what utilitarianism is, to show why it is the best theory of ethics, and to defend it against a wide range of criticisms and misunderstandings.
16. Which among the following is a feature of Socialist form of Economy?
[A] It is based on the demand and supply of market
[B] Competition exist in the market
[C] Private property is encouraged
[D] None of the above
Show Answer
Correct Answer: D [None of the above]
Notes:
The socialist form of economy is not based on market forces and competition doesn’t exist in the market. The state owns the factors of production and private property is not encouraged.
17. When was the Rolling Plan introduced in India?
[A] 1976-77
[B] 1978-79
[C] 1980-81
[D] 1983-84
Show Answer
Correct Answer: B [1978-79]
Notes:
The Rolling Plan was introduced in 1978-79 during the Janata Party regime under Morarji Desai. It replaced the Fifth Five-Year Plan framework for that period and was later discontinued when the Sixth Five-Year Plan was adopted.
18. When does the state government declare agricultural drought in an area?
[A] Rainfall less than normal by 10%
[B] Rainfall less than normal by 5%
[C] More than 20% state facing drought
[D] None of the above
Show Answer
Correct Answer: C [More than 20% state facing drought]
Notes:
Declaration of droughts is done by the States. Meteorological drought and agricultural drought are 2 kinds.
Meteorological drought is when rainfall is 10% or more, less than normal. Agricultural drought is when 20% or more area of a state is facing drought.
19. Which of the following is not a category of seeds?
[A] Breeder
[B] Foundation
[C] Certified
[D] Edged
Show Answer
Correct Answer: D [Edged]
Notes:
There are four generally recognized classes of seeds:
1. Breeder seed
2. Foundation seed
3. Registered seed
4. Certified seed
20. Which of the following crops is commonly established by direct seeding?
[A] Rice
[B] Pulses
[C] Groundnuts
[D] Sunflower
Show Answer
Correct Answer: B [Pulses]
Notes:
Direct seeding means sowing seed directly in the field without raising seedlings in a nursery and transplanting them later. Pulses are commonly sown this way, as are groundnuts and sunflower. Rice is usually transplanted in traditional cultivation, though direct-seeded rice is also practiced in some areas as a newer method.
