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 Asian Infrastructure Investment Bank (AIIB):
- India participated in the founding of the bank and signed the Memorandum of Understanding in October 2014.
- The headquarters of the AIIB are located in Beijing, China, specifically at the Asia Financial Center in the Olympic Forest Park area.
- The AIIB currently has over 100 member states from around the world.
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. India was among the founding members of the AIIB and signed the MoU in October 2014. The bank’s headquarters are indeed located in Beijing’s Asia Financial Center in the Olympic Forest Park area. As of now, AIIB has 111 members (including prospective members) from different continents, confirming it has over 100 member states.
12. What does a decreasing agricultural sector share in GDP generally indicate for a country?
[A] The country is undergoing structural transformation toward a more industrial and service-based economy
[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 undergoing structural transformation toward a more industrial and service-based economy]
Notes:
A declining share of agriculture in GDP usually means the economy is diversifying beyond farming. As countries develop, production shifts toward manufacturing and services, while agriculture’s relative contribution falls even if output may still rise in absolute terms. This pattern is commonly seen in economies undergoing structural change and modernization. Therefore, a decreasing agricultural sector share generally points to movement toward a more industrial and service-based economy.
13. 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.
14. Where is the headquarters of Hindustan Zinc Ltd?
[A] Jaipur
[B] Jodhpur
[C] Jaisalmer
[D] Udaipur
Show Answer
Correct Answer: D [Udaipur]
Notes:
Hindustan Zinc Limited (HZL) is an integrated mining and resources producer of zinc, lead, … Chanderiya (Chittorgarh), Debari (Udaipur) & Dariba (Rajsamand) in Rajasthan with total zinc and lead production capacity of 1.0 million tonnes.
15. What is an Indian Depository Receipt (IDR)?
[A] A deposit account with a public sector bank.
[B] A depository account with Indian depositories.
[C] An instrument in the form of a depository receipt.
[D] An instrument in the form of deposit receipt issued by Indian depositories.
Show Answer
Correct Answer: C [An instrument in the form of a depository receipt.]
Notes:
An Indian Depository Receipt (IDR) is a financial instrument denominated in Indian Rupees, issued by a domestic depository against the equity shares of a foreign company. IDRs are listed and traded on Indian stock exchanges. The concept was introduced under Section 605A of the Companies Act, 1956 and regulated by SEBI. The first IDR was issued by Standard Chartered PLC in 2010.
16. Which is a major drawback of capital-intensive industries? (UPSC Prelims 1982)
[A] High flexibility in demand adjustment
[B] Increased unemployment from automation
[C] Lower initial investment costs
[D] More worker innovation opportunities
Show Answer
Correct Answer: B [Increased unemployment from automation]
Notes:
Capital-intensive industries use automated machinery for production, as seen in sectors like automobile manufacturing. Automation reduces the need for human labor. This leads to displacement of workers, causing structural unemployment. In 2022, India’s manufacturing sector showed a trend toward greater automation. Labor-intensive industries offer more jobs, while capital-intensive ones contribute to unemployment.
17. Who typically benefits from a general rise in prices? (UPSC Prelims 1984)
[A] Debtors with fixed-rate debt
[B] Pensioners on fixed incomes
[C] Savers holding cash
[D] Creditors holding nominal debt
Show Answer
Correct Answer: A [Debtors with fixed-rate debt]
Notes:
When prices rise due to inflation, the real value of money declines. Debtors with fixed-rate debt pay back their loans in money that is worth less than when they borrowed it. This reduces the real burden of their debt. Fixed-rate debt terms remain unchanged despite money’s decreased purchasing power, benefitting debtors during periods of inflation. Creditors and savers lose real value in such scenarios.
18. What was India’s share in world tea exports in 2024?
[A] More than 40%
[B] Between 20% and 30%
[C] About 13%
[D] Less than 5%
Show Answer
Correct Answer: C [About 13%]
Notes:
According to Tea Board India’s 2024 data, India exported 256 million kg of tea, giving it about 13% of global tea exports. India remained among the major tea-exporting countries, alongside Kenya, Sri Lanka and China. The share is far below 20% but clearly higher than 10%, making about 13% the best answer. This reflects India’s strong position in the global tea trade during 2024.
19. What is the objective of a welfare state?
[A] To provide health facilities to all citizens
[B] Provide welfare to poorest of the poor
[C] To ensure maximum benefit to maximum people
[D] None of these
Show Answer
Correct Answer: C [To ensure maximum benefit to maximum people]
Notes:
India considers itself as a welfare state. A welfare state is a concept of government in which the state play a key role in the protection and promotion of the economic and social well being of its citizens. It is based on the Principle of equality of opportunities equitable distribution of health and public responsibility for these unable to able themselves of the minimal provision for a good life.
20. What is the Horticulture premium in the PM Fasal Bima Yojna?
[A] 5%
[B] 2%
[C] 4%
[D] 6%
Show Answer
Correct Answer: A [5%]
Notes:
The PM Fasal Bima Yojana is launched to provide crop insurance to farmers. Ministry of agriculture is implementing it. All crops are covered in it. Kharif premium is 2%, Rabi is 1.5% and Horticulture is 5%.
