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. Who regulates interest rates on savings bank accounts in India?
[A] Not regulated
[B] Regulated by Central Government
[C] Regulated by RBI
[D] Regulated by State Governments
Show Answer
Correct Answer: C [Regulated by RBI]
Notes:
Reserve Bank of India (RBI) regulates savings bank account interest rates. Since October 2011, RBI deregulated these rates, letting banks set their own rates but still directing certain calculation and crediting methods. RBI issues guidelines for frequency of interest payments and storage of balances. RBI operates under the Reserve Bank of India Act, 1934 and directions updated periodically for banking operations.
12. What relationship does the Laffer Curve show between tax rates and tax revenue?
[A] Tax revenue increases continuously as tax rates rise
[B] Tax revenue increases then decreases after an optimal tax rate
[C] Tax revenue decreases continuously as tax rates rise
[D] Tax revenue remains constant at all tax rates
Show Answer
Correct Answer: B [Tax revenue increases then decreases after an optimal tax rate]
Notes:
The Laffer Curve was developed by economist Arthur Laffer in 1974. It illustrates that government tax revenue increases with higher tax rates up to a specific optimal point. Beyond this optimal rate, further increases in the tax rate lead to a decline in revenue due to reduced economic activity and shrinking tax base. The precise optimal rate is not fixed and varies by country and economy.
13. The report of Vijay Kelkar committee is related to which of the following?
[A] Trade Reforms
[B] Centre-State Financial Relations
[C] Disinvestment in Public Sector Enterprises
[D] Tax Reforms
Show Answer
Correct Answer: D [Tax Reforms]
Notes:
Impetus to direct tax reforms in India, came with the recommendations of the Task Force on Direct & Indirect Taxes under the chairmanship of Vijay Kelkar in 2002. The main recommendations of this task force related to the direct taxes related to increasing the income tax exemption limit, rationalization of exemptions, abolition of long term capital gains tax, abolition of wealth tax etc.
14. What is India’s current global ranking in cotton production?
[A] First
[B] Second
[C] Third
[D] Fourth
Show Answer
Correct Answer: B [Second]
Notes:
In 2025, India ranks second worldwide in cotton production, producing about 5.1 million tonnes. China ranks first with 7.5 million tonnes. India accounts for 20% of world cotton production and leads in total cotton cultivation area, covering 38% of the world’s cotton-growing land. The expected output for 2025-26 in India is around 23.5-24.5 million bales.
15. Which was the largest part of non-plan expenditure in 1991-92? (UPSC Prelims 1992)
[A] Subsidies on fertilizer
[B] Compensation to banks for loan waiving
[C] Interest payment
[D] Compensation for PSU losses
Show Answer
Correct Answer: C [Interest payment]
Notes:
In 1991-92, interest payments were the largest non-plan expenditure, estimated at Rs. 27,450 crores, surpassing other items like subsidies and compensations. This reflected the high fiscal burden due to accumulated government debt and was a key reason for economic reforms initiated that year.
16. Which of the below is a correct statement regarding inferior goods?
[A] Demand of a good decreases with increases in peoples income
[B] Demand of a good increases with increases in peoples income
[C] Demand of a good decreases with decrease in peoples income
[D] Demand of a good increase with decrease in peoples income
Show Answer
Correct Answer: A [Demand of a good decreases with increases in peoples income]
Notes:
An inferior good is an economic term that describes a good whose demand drops when people’s incomes rise. This occurs when a good has more costly substitutes that see an increase in demand as incomes and the economy improve. Inferior goods are the opposite of normal goods where in normal goods, a consumer would demand less of if they had a higher level of real income.
17. Who is the founder of the Indian Statistical Institute in Kolkata?
[A] C.R.Rao
[B] P.C.Mehalonibis
[C] Yoginder K ALagah
[D] Amartya Sen
Show Answer
Correct Answer: B [P.C.Mehalonibis]
Notes:
P.C.Mehalonibis is the father of Indian statistical research and the brains behind some of Independent India’s most essential tools of governance. The Bengali scientist and applied statistician founded India’s oldest and most prestigious statistical institution at Kolkata.
18. Which of the following statements is true regarding a mixed economy?
[A] Private property is not encouraged
[B] Monopoly doesn’t exist in market
[C] The government play a role in the production and distribution of resources
[D] Consumers choice is limited
Show Answer
Correct Answer: C [The government play a role in the production and distribution of resources]
Notes:
In a mixed economic system, there is a cross between a market economy and the Socialist economy. In the most common types of mixed economies, the market is more or less free of government ownership except for a few key areas like transportation or sensitive industries like defense and railroad.
19. Which of the following is / are correct statements regarding the organized sector?
- They are controlled by the government
- The employment terms are fixed
- It provides Low wages
- The sector is registered with the government.
Choose the correct option from the choices given below:
[A] 1 and 2 only
[B] 2 and 3 only
[C] 1 and 4 only
[D] All of the above
Show Answer
Correct Answer: C [1 and 4 only]
Notes:
An organized sector is a sector, employment terms are fixed and regular, and the employees get assured work and social security. This sector is registered with the government and a number of acts apply to the enterprises. Schools and hospitals are covered in the organized sector. Workers in the organized sector enjoy the security of employment. They are expected to work only a fixed number of hours. If they work more, they have to be paid overtime by the employer.
20. Which of the following are part of the Quaternary sector?
[A] Banking
[B] Agriculture
[C] Restaurant
[D] Information technology
Show Answer
Correct Answer: D [Information technology]
Notes:
The quaternary sector consists of intellectual activities often associated with technological innovation. It is sometimes called the knowledge economy.
