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. In which of the following case, law of demand fails?
[A] Giffen goods
[B] Normal goods
[C] Inferior goods
[D] Both Giffen and Inferior goods
Show Answer
Correct Answer: A [Giffen goods]
Notes:
A Giffen good, in economic theory, is a good that is in greater demand as its price increases. For example, if the price of an essential food staple, such as rice, rises it may mean that consumers have less money to buy more expensive foods, so they will actually be forced to buy more rice.
12. The demand for heavy loans can lead to which situation for banks?
[A] Improved bank cost efficiency through scale economies
[B] Liquidity constraints and solvency risks for banks
[C] Reduced need for risk management systems
[D] Automatic increases in bank capital reserves
Show Answer
Correct Answer: B [Liquidity constraints and solvency risks for banks]
Notes:
Heavy loan demand can strain a bank’s available liquid assets, increasing the risk of liquidity shortfall. High loan volumes, if unmatched by equivalent growth in capital or asset quality, can adversely impact the solvency position of banks. The Basel III regulatory framework emphasizes maintenance of adequate capital buffers to absorb credit risk and liquidity shocks. Instances of aggressive loan growth have historically preceded bank distress during financial crises.
13. Using iron instead of wooden ploughs is an example of which technology? (UPSC Prelims 1983)
[A] Obsolete technology
[B] Appropriate technology
[C] Redundant technology
[D] Ultimate technology
Show Answer
Correct Answer: B [Appropriate technology]
Notes:
Appropriate technology refers to methods or tools that are affordable, locally adaptable, and suited to the community’s needs. Iron ploughs replace less durable wooden ones, improving productivity and lifespan without requiring advanced infrastructure. The shift increases agricultural efficiency in areas with limited resources. This practice matches the concept of appropriate technology in rural agricultural settings.
14. Which among the following is best described as opportunity cost?
[A] Difference between the return on chosen option and the return on best forgone option
[B] Difference between two chosen options
[C] Difference between the return this year and the previous year
[D] None of the above
Show Answer
Correct Answer: A [Difference between the return on chosen option and the return on best forgone option]
Notes:
Opportunity costs represent the benefits an individual, investor or business misses out on when choosing one alternative over another. It is the “cost” incurred by not enjoying the benefit associated with the best alternative choice.
15. What defines a market place in an economy?
[A] Place where profits are made
[B] Place where goods are made
[C] Place where people meet
[D] Place where buyers meet sellers
Show Answer
Correct Answer: D [Place where buyers meet sellers]
Notes:
A market is a place where forces of demand and supply operate and where buyers and sellers interact to trade goods, services, or contracts or instruments for money or barter.
16. What is output per unit of input of labor known as?
[A] Labor Productivity
[B] Production ability
[C] Capacity
[D] None of the above
Show Answer
Correct Answer: A [Labor Productivity]
Notes:
Productivity, in economics, measures output per unit of input, such as labor, capital, or any other resource – and is typically calculated for the economy as a whole, as a ratio of GDP to hours worked.
17. What does decreasing contribution of agriculture to GDP signifies?
[A] Country is becoming poor
[B] Country is becoming less developed
[C] Country is becoming more developed
[D] None of the above
Show Answer
Correct Answer: C [Country is becoming more developed]
Notes:
The movement from an agrarian-based economy to a manufacturing and the service-based economy shows that, a country is moving from a less developed phase to a developing and developed phase.
18. Which Japanese educator and thinker made a lasting impact on Japan following the 1868 Meiji Restoration?
[A] Francis Fukuyama
[B] Fukuzawa Yukichi
[C] Takero Doi
[D] None of the above
Show Answer
Correct Answer: B [Fukuzawa Yukichi]
Notes:
Fukuzawa Yukichi (1835–1901) was a Japanese educator, writer, and political thinker whose ideas strongly influenced Japan’s modernization after the Meiji Restoration of 1868. He advocated practical learning, independence, and Western-style education, making him one of the most important intellectual figures of modern Japan.
19. In which type of economy is government interference is limited?
[A] Socialist economy
[B] Market Economy
[C] Mixed Economy
[D] None of the above
Show Answer
Correct Answer: B [Market Economy]
Notes:
Market economy or capitalist economy works on the laissez-faire principle where there is limited gov and market forces of demand and supply plays a key role in its functioning.
20. On which date, NITI Aayog was established?
[A] 1 January 2015
[B] 25 January 2016
[C] 14 May 2014
[D] 1 July 2015
Show Answer
Correct Answer: A [1 January 2015]
Notes:
NITI Aayog established on 1 January 2015. Its full form is a National Institution for Transforming India. It replaced the Planning commission.
