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 does a decreasing agricultural sector share in GDP indicate for a country?
[A] The country is heading toward developed nation status
[B] The country is becoming a developing nation
[C] The country is becoming less developed
[D] Agricultural production has completely stopped
Show Answer
Correct Answer: A [The country is heading toward developed nation status]
Notes:
The agricultural sector’s GDP share typically declines as countries industrialize and modernize. In 2023, developed economies like the United States had agriculture contributing less than 1% to GDP. In developing nations, the sector’s share is higher—such as Kenya at around 33%. A falling agricultural share indicates structural transformation toward an industrial and service-based economy.
12. Who can sponsor Infrastructure Debt Funds (IDFs) in India?
[A] SEBI
[B] NBFCs
[C] Cooperative societies
[D] Commercial banks
Show Answer
Correct Answer: D [Commercial banks]
Notes:
Infrastructure Debt Funds (IDFs) in India can be sponsored by commercial banks under RBI guidelines. The Reserve Bank of India permits scheduled commercial banks with a profit track record to sponsor IDF-NBFCs. IDFs facilitate long-term debt funding for infrastructure projects. IDFs may also be structured and sponsored by NBFCs. IDF-NBFCs are regulated by RBI, while IDF-MFs are regulated by SEBI.
13. Which of the following is the reason behind the release of ‘Grants-in-aid’ for states?
[A] Improving the Centre-State relationship
[B] Reducing regional imbalances
[C] Improving the development of backward areas
[D] Various development schemes
Show Answer
Correct Answer: C [Improving the development of backward areas]
Notes:
A grant-in-aid is the transfer of money from the federal government to a state government, local government or individual person for the purposes of funding a specific project or program. It is money coming from a central government for a specific project. This kind of funding is usually used when the government and parliament have decided that the recipient should be publicly funded.
14. What mainly makes national income calculation difficult in India? (UPSC Prelims 1983)
[A] Large population growth
[B] Very low per capita income
[C] Existence of non-monetized sectors
[D] Insufficient government infrastructure
Show Answer
Correct Answer: C [Existence of non-monetized sectors]
Notes:
India has a large non-monetized sector, especially in rural areas, where many goods and services are exchanged through barter or kept for self-consumption. This makes it challenging to assign monetary values during national income calculations. The Central Statistical Office reports this as a major obstacle for accurate estimation since such transactions are not recorded in the monetary economy.
15. What was the prime concern of the Uruguay Round negotiations? (UPSC Prelims 1990)
[A] The debt burden of developing countries.
[B] Restrictions on flexible exchange rate systems.
[C] Restrictions on fishing rights on the high seas.
[D] Barriers to market access, domestic support, and export subsidies in agriculture.
Show Answer
Correct Answer: D [Barriers to market access, domestic support, and export subsidies in agriculture.]
Notes:
The Uruguay Round of negotiations ran from 1986 to 1994 under GATT. Its Agreement on Agriculture targeted market access, domestic support, and export subsidies as three core areas for agricultural reform. The round resulted in the Uruguay Round Agreement on Agriculture (URAA), which mandated reductions in these barriers. The Agreement was signed in Marrakesh in April 1994, leading to the establishment of the WTO in 1995.
16. Which among the following best describes scarcity in economics?
[A] Low demand for good
[B] High demand and less supply of good
[C] Low demand as people don’t want to consume it
[D] Goods available are not free
Show Answer
Correct Answer: D [Goods available are not free]
Notes:
Scarcity means limited goods are for more number of people. In an Economy the resources are scarce and the wants are unlimited.
17. Which of the following are part of National income?
[A] Value of all goods and services produced in a financial year
[B] An reused good sold in that financial year
[C] Service rendered by housewife
[D] None of the above
Show Answer
Correct Answer: A [Value of all goods and services produced in a financial year]
Notes:
In the calculation of national income, the value of goods and services produced in a year is added. While the value of old sold goods and the services of the housewife is not added.
18. Who wrote “The Theory of Interest as Determined by Impatience to Spend Income and Opportunity to Invest It”?
[A] Alfred Marshall
[B] Milton Friedman
[C] J S Mill
[D] Irving Fisher
Show Answer
Correct Answer: D [Irving Fisher]
Notes:
Irving Fisher, a leading American neoclassical economist, published “The Theory of Interest as Determined by Impatience to Spend Income and Opportunity to Invest It” in 1930. His pioneering work analyzed interest rates, relating them to savings impatience and investment opportunities, influencing modern interest theory and macroeconomics.
19. Which economic system is known as the Keynesian Economic system?
[A] Market economic system
[B] Mixed economic system
[C] Socialist economic system
[D] None of the above
Show Answer
Correct Answer: B [Mixed economic system]
Notes:
The mixed economic system combines the command economy and free-market economy, so it has the features of both of these two economic systems. It is also known as the Keynesian economic system or dual economic system.
20. What was the first five-year plan known as?
[A] Mahalonibis Model
[B] Bombay Plan
[C] Harrod Domar plan
[D] None of these
Show Answer
Correct Answer: C [Harrod Domar plan]
Notes:
India adopted five-year plans from 1950 after independence. The first five-year plan was based on the Harrod-Domar model which is based on steady-state growth.
