Indian Economy MCQs

Notes:
The Reserve Bank of India sets the Bank Rate to influence lending rates. When the Bank Rate increases, borrowing from the RBI becomes costlier for commercial banks. This leads to higher lending and deposit rates in the economy. The last significant change in India’s Bank Rate was in May 2022, set at 4.65%. The Bank Rate mechanism is used as a monetary policy tool.

Notes:
Currency depreciation makes exports cheaper and imports costlier, reducing trade deficits. Many developing countries use depreciation to ease repayment burdens of foreign currency debt. The Asian Financial Crisis of 1997 saw multiple countries devalue currencies to manage debt. Currency devaluation has been used by China and Argentina to address trade imbalances. Such policies are often monitored by the International Monetary Fund.

Notes:
C is the correct answer. In case of the primary market, investors buy securities directly from the company issuing them, while in the secondary market, investor’s trade securities among themselves. Thus, Primary market is for raising the Equity capital or share capital, which is the owners’ interest on the assets of the enterprise after deducting all its liabilities. This mechanism of buying and selling shares through stock exchange is known as the secondary markets.

Notes:
Effective Revenue Deficit is the difference between revenue deficit and grants for creation of capital assets.

Notes:
A Pay Order is similar to a Banker’s Cheque, as both are instruments issued by banks guaranteeing payment to a specified payee. Unlike a Bank Draft, which can be issued by individuals, a Banker’s Cheque is always issued by the bank itself. Both are considered safer than cash and are used for transactions where the payee requires guaranteed funds.

Notes:
The Index of Industrial Production is compiled and published monthly by the National Statistics Office. The National Statistics Office operates under the Ministry of Statistics and Programme Implementation. The responsibility for IIP preparation was transferred from the Central Statistical Office to the NSO. The IIP covers mining, manufacturing, and electricity sectors and is released six weeks after each reference month.

Notes:
Stagflation, as you might know is a condition when economy isn’t growing but prices are. So, this option would be opted out. Next two are disinflation and deflation. Disinflation means rise in prices has slowed down significantly as compared with the previous year. This simply implies that prices don’t fall during disinflation also. Deflation is when the prices actually fall. Kindly note that deflation usually moves hand in hand with economic slowdown, lower productivity and loss of employments.

Notes:
The Janta Government terminated the fifth five year plan in 1977-78 and launched its own sixth five year plan for period 1978-83 and called it a Rolling Plan. This second plan is kept changing as per the requirements of the economy (and politics).

Notes:
Direct marketing involves offering products or services directly to consumers without intermediaries. ATMs allow banks to interact directly with customers, promote products, and deliver messages through on-screen advertisements and printed receipts. Banks in India use ATMs for targeted promotions. Direct marketing differs from indirect and social marketing by focusing on direct communication with customers.

Notes:
As of January 31, 2026, India’s installed capacity is 520,511 MW. Non-fossil fuel sources, including renewables and nuclear, total 271,969 MW, accounting for over 52% of total installed capacity. This exceeds the fossil fuel-based capacity of 248,542 MW. Major components of non-fossil fuel capacity are solar and wind energy.