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. Consider the following statements:
- Stocks offer higher average returns than bonds and other fixed-income investments, but with correspondingly higher volatility and risk.
- Stock prices are primarily governed by supply and demand, with earnings being the most important influencing factor.
Which of the above statements is/are correct?
[A] Both 1 and 2
[B] Only 1
[C] Only 2
[D] Neither 1 nor 2
Show Answer
Correct Answer: A [Both 1 and 2]
Notes:
Both statements are correct. Historically, stocks have yielded higher average returns than bonds, but with greater short-term volatility and risk. Stock prices move according to supply and demand dynamics, but corporate earnings are widely recognized as the most significant fundamental factor driving these price changes and influencing investor sentiment and market pricing.
12. Consider the following statements regarding the classification of government expenditure in India prior to 2017-18:
- Subsidies were classified under non-plan expenditures of the government.
- Interest payments and debt servicing were classified under non-plan expenditures of the government.
- Defence expenditures were classified under non-plan expenditures of the government.
Which of the above statements is/are correct?
[A] Only 1
[B] 1 and 2 only
[C] 2 and 3 only
[D] 1, 2 and 3
Show Answer
Correct Answer: D [1, 2 and 3]
Notes:
All three statements are correct. Before 2017-18, the government’s non-plan expenditure included subsidies, interest payments and debt servicing, and defence expenditures. Non-plan expenditures covered routine and obligatory expenses such as salaries, pensions, subsidies, interest, defence outlays, and grants. From 2017-18 onward, the classification was replaced by Revenue and Capital expenditure categories.
13. Which organization publishes the Inclusive Growth and Development Report?
[A] World Bank
[B] International Monetary Fund
[C] World Economic Forum
[D] Organisation for Economic Cooperation and Development
Show Answer
Correct Answer: C [World Economic Forum]
Notes:
The World Economic Forum publishes the Inclusive Growth and Development Report. The Inclusive Development Index was introduced with this report in 2017. The report evaluates economies using parameters like education, employment, labor compensation, and social protection. The World Economic Forum is headquartered in Geneva, Switzerland, and began the series under its System Initiative on Economic Growth and Social Inclusion.
14. What is the main goal of Antyodaya Anna Yojana (AAY) scheme?
[A] Provide employment to urban workers
[B] Ensure food security for the poorest
[C] Subsidize inputs for marginal farmers
[D] Distribute cash to BPL households
Show Answer
Correct Answer: B [Ensure food security for the poorest]
Notes:
The Antyodaya Anna Yojana was launched in December 2000 by the Government of India. Its objective is to provide food security to the poorest of the poor identified under the Targeted Public Distribution System. Eligible families receive 35 kg of food grains per month at highly subsidized prices—rice at ₹3/kg and wheat at ₹2/kg. This scheme operates nationwide.
15. In a centrally planned economy, who among the following plans all the important activities in the economy?
[A] Industrialists
[B] Citizens
[C] Judiciary
[D] Government
Show Answer
Correct Answer: D [Government]
Notes:
A centrally planned economy is an economic system in which the state or government makes economic decisions rather than the these being made by the interaction between consumers and businesses.
16. World Tourism Day is celebrated on which of the following days?
[A] September 12
[B] September 25
[C] September 29
[D] September 27
Show Answer
Correct Answer: D [September 27]
Notes:
Since 1980, the United Nations World Tourism Organization has celebrated World Tourism Day as international observances on September 27. This date was chosen as on that day in 1970, the Statutes of the UNWTO were adopted.
17. Which of the following are money markets instruments?
[A] A 14-day repurchase agreement of Treasury 8% 2007
[B] A treasury bill with 7 days to maturity
[C] A 3-month certificate of deposit
[D] All of the above
Show Answer
Correct Answer: D [ All of the above ]
Notes:
The short-term debts and securities sold on the money markets—which are known as money market instruments—have maturities ranging from one day to more.
18. What is the important function of taxation in India? (UPSC Prelims 1986)
[A] Reduce black money
[B] Generate funds for Government expenditure
[C] Reduce inflation
[D] None of the above
Show Answer
Correct Answer: B [Generate funds for Government expenditure]
Notes:
Taxation plays an important role in regional development and fulfilling government expenditure. Tax incentives such as tax holiday for setting up industries in backward regions, which induces business firms to set up industries in such regions, Tax revenue collected by government is also utilized for development of infrastructure in backward regions.
19. Which one of the following statements regarding the levying, collecting and distribution of Income Tax is correct? (UPSC Prelims 1999)
[A] The Union levies, collects and distributes the proceeds of income-tax between itself and the States
[B] The Union levies, collects and keeps all the proceeds of income-tax to itself
[C] The Union levies and collects the tax but all the proceeds are distributed among the States
[D] Only the surcharge levied on income-tax is shared between the Union and the States
Show Answer
Correct Answer: A [The Union levies, collects and distributes the proceeds of income-tax between itself and the States]
Notes:
Article 270 permitted mandatory sharing of the net proceeds of income tax levied and collected by the Union with the States. Such proceeds assigned to States did not form part of the Consolidated Fund of India. Article 272 provided for sharing of Union excise duties, if Parliament by law so provided.
20. What does free market in an economy imply?
[A] Minimum government intervention in trade and maximum regulations
[B] Maximum government intervention in trade and maximum regulations
[C] Minimum government intervention in trade and minimum regulations
[D] Maximum government intervention in trade and maximum regulations
Show Answer
Correct Answer: C [Minimum government intervention in trade and minimum regulations]
Notes:
In a free market economy, the law of supply and demand, rather than a central government, regulates production and labor. Companies sell goods and services at the highest price consumers are willing to pay while workers earn the highest wages companies are willing to pay for their services
