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 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.
12. What will drive MENA region economic growth in 2026?
[A] Petroleum production alone
[B] Petroleum and economic diversification with AI development
[C] Tourism and hospitality exclusively
[D] Manufacturing exports
Show Answer
Correct Answer: B [Petroleum and economic diversification with AI development]
Notes:
The World Bank projects 2026 MENA growth to strengthen to 3.6% due to oil exporters’ growth and resilient non-oil activity. GCC economies are implementing economic diversification strategies. The UAE and Saudi Arabia prioritize AI and data center sectors in their Vision 2030 plans. Consumer packaged goods are projected to reach $650 billion by 2030 with 5% annual growth. Economic diversification and AI development are significant drivers.
13. SIDO is associated with which of the following industries?
[A] Small industry
[B] Iron industry
[C] Steel industry
[D] Soap industry
Show Answer
Correct Answer: A [Small industry]
Notes:
The Small Industries Development Organization (SIDO) is the national SME Development Agency of India. It is a major constituent of the Ministry of Small Scale Industries of the Government of India. It was Set up in 1954, SIDO provides services to small industry throughout the country by implementing a broad program of activities and services like Entrepreneurship Development, Tool Room Services, Testing Centres, Extension Services, R&D Services, etc.
14. 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.
15. In what form do banks maintain CRR with the RBI?
[A] Cash
[B] Government Securities
[C] Gold
[D] All of the above
Show Answer
Correct Answer: A [Cash]
Notes:
CRR requires banks to hold a specified percentage of their deposits as liquid cash with RBI; no securities or gold are allowed.
16. Which of the following says that the marginal product of a factor input initially rises with its employment level. But after reaching a certain level of employment, it starts falling?
[A] Law of diminishing marginal product
[B] Law of variable proportions
[C] The Short Run
[D] The Long Run
Show Answer
Correct Answer: B [Law of variable proportions]
Notes:
The law of variable proportions states that as the quantity of one factor is increased, keeping the other factors fixed, the marginal product of that factor will eventually decline.
17. Which focus marked the Seventh Five-Year Plan’s long-term fiscal policy? (UPSC Prelims 1987)
[A] Capital formation by increasing money income
[B] Reforming the taxing system
[C] Making tax laws easily comprehensible
[D] Tackling deep-seated poverty and unemployment
Show Answer
Correct Answer: D [Tackling deep-seated poverty and unemployment]
Notes:
The Seventh Five-Year Plan emphasized reducing poverty and unemployment, aiming to improve quality of life and create productive rural employment opportunities. The policy focused on social objectives alongside economic growth, prioritizing poverty alleviation over tax reforms or comprehension.
18. Why did famine intensity rise in India under British rule? (UPSC Prelims 1991)
[A] The failure of monsoons became frequent
[B] The drain of wealth from India was uncontrolled
[C] Poor distribution of food grains
[D] Discriminatory protection to food processing industries
Show Answer
Correct Answer: B [The drain of wealth from India was uncontrolled]
Notes:
The uncontrolled drain of wealth by the British depleted resources, worsening famines. From 1763–1856, over 40 major rebellions followed such crises. The Sanyasi Rebellion post-1770 Bengal famine exemplifies the link between exploitation and food crises during British rule.
19. Which of the following are part of the Quaternary sector?
[A] Banking
[B] Agriculture
[C] Restaurant
[D] Information technology
Show Answer
Correct Answer: D [Information technology]
Notes:
The quaternary sector consists of intellectual activities often associated with technological innovation. It is sometimes called the knowledge economy.
20. Who established Central India Spinning, Weaving, and Manufacturing Company in Bombay?
[A] Ratan Tata
[B] Jamsetji Tata
[C] D.Birla
[D] Baldev Das Birla
Show Answer
Correct Answer: B [Jamsetji Tata]
Notes:
Jamsetji Tata began his industrial career in 1877 with the Central India Spinning, Weaving, and Manufacturing Company in Bombay.
