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. The term “Open Unemployment” is used when:
[A] people are not willing to work
[B] people are willing but not get work
[C] people leave their jobs in search of better ones
[D] people get the jobs but no regular payments
Show Answer
Correct Answer: B [ people are willing but not get work ]
Notes:
Open unemployment is a condition in which people have no work to do. They are able to work and are also willing to work but there is no work for them. They are found partly in villages, but very largely in cities. Most of them come from villages in search of jobs, many originate in cities themselves. Such employment can be seen and counted in terms of the number of such persons. Hence it is called open unemployment.
12. Which of the following indicates a Liquidity trap?
[A] expansionary monetary policy does not encourage economic growth
[B] open market operations results in decrease in interest rates
[C] government prefers fiscal policies over monetary policies to regulate the money supply
[D] government undergoes liquidation of the government holdings on larger-scale to reduce fiscal deficit
Show Answer
Correct Answer: A [ expansionary monetary policy does not encourage economic growth ]
Notes:
Liquidity trap is a situation when expansionary monetary policy does not increase the interest rate, income and hence does not encourage the economic growth.
13. Which was NOT a stipulated target in the FRBM Act, 2003?
[A] Elimination of revenue deficit
[B] Reduction of fiscal deficit to 3% of GDP
[C] Limiting government guarantees to 0.5% of GDP
[D] Complete elimination of primary deficit
Show Answer
Correct Answer: D [Complete elimination of primary deficit]
Notes:
The FRBM Act, 2003 mandated elimination of revenue deficit, reduction of fiscal deficit to 3% of GDP, and limitation of government guarantees. The Act did not stipulate complete elimination of the primary deficit as a statutory target. The focus was on fiscal and revenue deficit reduction. The 2018 amendment revised several targets but did not mandate elimination of the primary deficit as a statutory requirement.
14. The payment and settlement system in India is managed by_?
[A] SEBI
[B] RBI
[C] National Payments Corporation of India
[D] Ministry of Finance
Show Answer
Correct Answer: B [ RBI ]
Notes:
RBI manages the payment and settlement system in India.
15. Which of the following is India’s first payments bank?
[A] Jio Payments Bank Ltd
[B] Paytm Payments Bank
[C] India Post Payments Bank
[D] Airtel Payments Bank
Show Answer
Correct Answer: D [ Airtel Payments Bank ]
Notes:
Fourth option is the correct answer. Airtel Payments Bank is India’s first payments bank.
16. Which among the following is India’s first Oil refinery?
[A] Guwahati Refinery
[B] Vishakhapatnam Refinery
[C] Digboi Refinery
[D] Barauni Refinery
Show Answer
Correct Answer: C [ Digboi Refinery ]
Notes:
Crude oil was discovered here in late 19th century. Digboi is known as the Oil City of Assam where the first oil well in Asia was drilled. The first refinery was started here as early as 1901. Digboi has the oldest oil Refinery in operation.
17. Which of the following rate is charged by banks to their most credit worthy customers?
[A] Prime Lending Rate
[B] Repo Rate
[C] Statutory Liquidity Rate
[D] Bank Rate
Show Answer
Correct Answer: A [Prime Lending Rate]
Notes:
A prime rate or prime lending rate is an interest rate used by banks, usually the interest rate at which banks lend to favoured customers—i.e., those with good credit.
18. What should be the minimum net worth of a company to get registered as Infrastructure Finance Company?
[A] Rs 250 crore
[B] Rs 350 crore
[C] Rs 300 crore
[D] Rs 100 crore
Show Answer
Correct Answer: C [Rs 300 crore]
Notes:
As per RBI, any non-banking financial company can be registered as an Infrastructure Finance Company, subject to the company must have a minimum net worth of Rs 300 Crore.
19. Which tax contributes most to India’s central revenue in Budget 2026 estimates? (UPSC Prelims 1991)
[A] Goods and Services Tax (GST)
[B] Income Tax
[C] Customs Duty
[D] Corporate Tax
Show Answer
Correct Answer: B [Income Tax]
Notes:
In the Union Budget 2026 estimates, income tax is projected as the largest contributor to central tax revenue at 32%. The government expects income tax collections of around ₹13.6 lakh crore for FY26. The share of GST is approximately 27.6%. Customs duty accounts for about 5-6%. Direct taxes overall form 61.2% of gross tax revenue, with income tax being the leading component.
20. What is referred to as the “invisible hand” in a market economy?
[A] Trade
[B] Money
[C] Demand and supply
[D] Competition
Show Answer
Correct Answer: D [Competition]
Notes:
Adam Smith’s “invisible hand” describes competition, which guides market resources efficiently and benefits society even if individuals act in self-interest. This concept is foundational in classical economic theory and emphasizes the self-regulating nature of competitive markets.
