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. What is amortization in banking?
[A] A lump-sum repayment of loan at maturity
[B] Gradual repayment with both principal and interest
[C] Payment of interest only, principal at end
[D] Writing off intangible asset expenses
Show Answer
Correct Answer: B [Gradual repayment with both principal and interest]
Notes:
Amortization refers to scheduled loan repayment through periodic payments including both principal and interest. Each payment gradually reduces the outstanding loan balance. Early payments cover more interest; later ones pay more principal. Mortgages and term loans typically follow an amortization schedule with set time frames like 15 or 30 years. The balance decreases with every regular installment.
12. Which of the following statements is correct about the Countervailing duty?
[A] It is the tariff levied on imported goods to offset subsidies offered by the exporting country to its producers
[B] It is the tariff imposed on exported goods to reduce exports and increase the domestic supply
[C] It is the tax levied on revenues received by a corporation, even if it does not make any profit
[D] It is the tax levied on purchase or sale of various financial products like stocks, derivatives, mutual funds etc
Show Answer
Correct Answer: A [ It is the tariff levied on imported goods to offset subsidies offered by the exporting country to its producers ]
Notes:
First option is the correct answer
Countervailing duty is a tariff imposed on imported goods to offset the subsidies offered by the exporting country to its producers. It is imposed to provide level playing field to domestic producers and foreign producers.
13. What do we call the funds that the banks keep with RBI as a portion of their Net Demand and Time Liabilities?
[A] Statutory Liquidity Ratio
[B] Cash Reserve Ratio
[C] Bank Rate
[D] Reverse Repo Rate
Show Answer
Correct Answer: B [Cash Reserve Ratio]
Notes:
The Cash Reserve Ratio is the amount of funds that the banks are bound to keep with Reserve bank of India as a portion of their Net Demand and Time Liabilities (NDTL).
14. Which of the following is an economic system combining private and state enterprise?
[A] Private economy
[B] Market economy
[C] Mixed economy
[D] Centrally planned economy
Show Answer
Correct Answer: C [Mixed economy]
Notes:
A mixed economy is variously defined as an economic system blending elements of market economies with elements of planned economies, free markets with state interventionism, or private enterprise with public enterprise.
15. Which among the following is a direct tax?
[A] Corporate tax
[B] Wealth tax
[C] Income tax
[D] All of the above
Show Answer
Correct Answer: D [All of the above]
Notes:
Direct tax is a government levy on the income, property, or wealth of people or companies. A direct tax is borne entirely by the entity that pays it, and cannot be passed on to another entity. Examples include corporation tax, income tax, and social security contributions.
16. Which authority regulates NBFCs in India?
[A] Reserve Bank of India
[B] SEBI
[C] Government of India
[D] National Housing Board
Show Answer
Correct Answer: A [Reserve Bank of India]
Notes:
The Reserve Bank of India regulates NBFCs under Chapter III-B of the Reserve Bank of India Act, 1934. RBI issues registration and operational guidelines for NBFCs. As of 2026, the RBI introduced differentiated regulations for Type I and Type II NBFCs. Housing finance companies also registered with the National Housing Board come under RBI oversight after 2019 regulatory amendments.
17. On which of the following the economy of Brazil is mostly dependent? (UPSC Prelims 1984)
[A] Tea
[B] Coffee
[C] Tobacco
[D] Sugar
Show Answer
Correct Answer: B [Coffee]
Notes:
Coffee production in Brazil is responsible for about a third of all coffee, making Brazil by far the world’s largest producer. It is a position the country has held for the last 150 years. Coffee plantations, covering some 27,000 km2 are mainly located in the southeastern states of Minas Gerais, Sao Paulo and Parana where the environment and climate provide ideal growing conditions. So coffee is the main reason of Brazil’s economy.
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 is included in market price?
[A] Indirect taxes
[B] Direct taxes
[C] Subsidies
[D] None of the above
Show Answer
Correct Answer: A [Indirect taxes]
Notes:
Market price(MP)refers to the actual transacted price and includes indirect taxes. The market price is the current price at which an asset or service can be bought or sold. The economic theory contends that the market price converges at a point where the forces of Supply and demand meet.
20. Which of the following is a limitation of free market?
[A] Low taxes
[B] Maximum Consumer choices
[C] Limited trade
[D] Uneven distribution of resources
Show Answer
Correct Answer: D [Uneven distribution of resources]
Notes:
In a market economy, the role of govt is very limited and cannot interfere with the private property even if it is concentrated in a few hands. This increase in private property leads to uneven wealth distribution. This also leads to Monopoly in the market.
