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. At what rate does RBI lend long-term funds to banks without collateral?
[A] Repo rate
[B] Bank rate
[C] Reverse repo rate
[D] CRR
Show Answer
Correct Answer: B [Bank rate]
Notes:
The bank rate is fixed by the Reserve Bank of India as the rate at which it lends long-term funds to commercial banks without collateral. As of February 2024, the bank rate is 6.75%. It differs from the repo rate, which is used for short-term secured lending. The RBI uses the bank rate as a monetary policy tool to control credit.
12. What is the purpose of Ways and Means Advances scheme?
[A] to give insurance to the large corporates for their investment in abroad projects
[B] to handle the mismatch between cash flow of the receipts and payments of the State Governments
[C] to promote export oriented projects by giving interest free credit
[D] None of the above
Show Answer
Correct Answer: B [to handle the mismatch between cash flow of the receipts and payments of the State Governments]
Notes:
Ways and means advances (WMA) is a mechanism used by Reserve Bank of India (RBI) to help the states tide over temporary mismatches in the cash flow of their receipts and payments.
13. Which state is the largest silk producer in India?
[A] Karnataka
[B] Assam
[C] Kerala
[D] Andhra Pradesh
Show Answer
Correct Answer: A [Karnataka]
Notes:
Karnataka produced 13,278 tonnes of raw silk in 2024-25, the highest in India. The state has consistently led silk production, accounting for around one-third of the country’s total output annually. Major silk-producing districts in Karnataka include Mandya, Kolar, Chikkaballapur, and Ramanagara. The Central Silk Board reports Karnataka’s dominance in mulberry silk production nationwide for several years.
14. Which of the following is represented by ‘Lorenz Curve’?
[A] Inflation
[B] Income Distribution
[C] Employment
[D] Deflation
Show Answer
Correct Answer: B [Income Distribution]
Notes:
In economics, the Lorenz curve is a graphical representation of the distribution of income or of wealth. It was developed by Max O. Lorenz in 1905 for representing inequality of the wealth distribution.
15. Which economic system does the “Socialistic Pattern” evolve from? (UPSC Prelims 1979).
[A] Free Economy
[B] Mixed Economy
[C] Public Sector
[D] None of the above
Show Answer
Correct Answer: B [Mixed Economy]
Notes:
The “Socialistic Pattern” is derived from the Mixed Economy system. In a mixed economic system, the features of both capitalism and socialism are amalgamated. It safeguards private property ownership and promotes certain economic liberty regarding capital usage. Yet, it also permits the government to meddle in economic activities to fulfill societal goals. This marriage of capitalism and socialism in a mixed economy paves the way for the emergence of the so-called “Socialistic Pattern”.
16. Which of the below is a correct statement regarding inferior goods?
[A] Demand of a good decreases with increases in peoples income
[B] Demand of a good increases with increases in peoples income
[C] Demand of a good decreases with decrease in peoples income
[D] Demand of a good increase with decrease in peoples income
Show Answer
Correct Answer: A [Demand of a good decreases with increases in peoples income]
Notes:
An inferior good is an economic term that describes a good whose demand drops when people’s incomes rise. This occurs when a good has more costly substitutes that see an increase in demand as incomes and the economy improve. Inferior goods are the opposite of normal goods where in normal goods, a consumer would demand less of if they had a higher level of real income.
17. Who is the first India born woman economist to become chief economist at International Monetary Fund?
[A] Arundhati Bhattacharya
[B] Gita Gopinath
[C] Chanda Kochhar
[D] None of the above
Show Answer
Correct Answer: B [Gita Gopinath]
Notes:
Indian Born Gita Gopinath became the first woman ever and second India-born to hold the prestigious post of Chief Economist to IMF in 2019. The first India-born to hold the top position at IMF was former RBI governor Raghuram Rajan.
18. What does a rolling plan refer to?
[A] Targets are changed every year
[B] Plan allocation changes every year
[C] Changes both allocation and target every year
[D] Dont change target but change allocation
Show Answer
Correct Answer: C [Changes both allocation and target every year]
Notes:
Rolling plan can be defined as the plan where there is no fixation of dates in respect of commencement and end of the plan. The meaning of the Rolling Plan was that now, every year the performance of the plan will be assessed and a new plan will be made next year based upon this assessment.
19. During which five-year plan the Private sector was given priority over the public sector?
[A] 5th
[B] 7th
[C] 6th
[D] 8th
Show Answer
Correct Answer: B [7th]
Notes:
Seventh Five Year Plan from 1985 to 1990 had the objective to establish a self-sufficient economy, opportunities for productive employment. For the first time, the private sector got priority over the public sector. Socialist India started moving away from it.
20. For the first time, indicative planning was used in which FIve Year Plan?
[A] Third Five Year Plan
[B] Fifth Five Year Plan
[C] Eighth Five Year Plan
[D] Tenth Five Year Plan
Show Answer
Correct Answer: C [Eighth Five Year Plan ]
Notes:
The Eighth Plan mentioned that planning would be reoriented so as to make it indicative. Under indicative planning, industries and other sectors are identified where future growth is to be encouraged. Its objective will be to develop the core sector through allocation and optimal utilization of funds.
