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. Accession Tax is levied on which among the following?
[A] New Property
[B] Gifts and bequests received by heirs.
[C] Rented Property
[D] Purchased Lands
Show Answer
Correct Answer: B [Gifts and bequests received by heirs.]
Notes:
Accession Tax is levied on gifts and bequests received by heirs. This tax applies to the transfer of property upon death, ensuring that the government collects revenue from inherited assets. In many jurisdictions, it is part of estate or inheritance tax laws, which can vary importantly. For instance, in the U.S., estate taxes apply to estates exceeding a certain value, while some countries have specific inheritance taxes on gifts received.
12. Which among the following was the main objective of the Fiscal Responsibility and Budget Management Act, 2003?
[A] Achieve Fiscal Surplus
[B] Eliminate Revenue deficit
[C] Eliminate Fiscal Deficit
[D] Stop Money Laundering
Show Answer
Correct Answer: B [Eliminate Revenue deficit]
Notes:
The main objective of the Fiscal Responsibility and Budget Management (FRBM) Act, 2003, was to eliminate the revenue deficit. This act aimed to ensure fiscal discipline by setting targets for the government to reduce its fiscal deficit and improve the overall financial health of the economy. The act mandates the government to present a medium-term fiscal policy and aims to enhance transparency in fiscal operations. It was introduced in response to rising fiscal deficits in the late 1990s and early 2000s, which posed risks to economic stability.
13. What is this vertical farming?
[A] Its a new method of agriculture in which crops are cultivated inside multi-storey buildings
[B] Its a new method of agriculture in which various unrelated crops are grown together in same tract of land
[C] Its a new method of agriculture in which various closely related crops are grown together in same tract of land
[D] In Vertical farming , many systems such as aquaculture, sericulture, pisciculture and bee culture are altogether used for better use of land and resources
Show Answer
Correct Answer: A [Its a new method of agriculture in which crops are cultivated inside multi-storey buildings]
Notes:
Vertical farming is a greenhouse method of agriculture where commercially viable crops are cultivated inside multi-storey buildings in cities to simulate natural ecological systems. Using advanced greenhouse technology such as hydroponics and aeroponics, the skyscrapers could theoretically produce fish, poultry, fruit and vegetables. Since everything is ‘hydroponics’ in this practice, ie, in mineral solutions, the problems of soil erosion, pesticide toxicity are not there.
14. Which among the following is / are included in the balance of payments?
1. Balance of Trade
2. Foreign Direct Investments
3. Foreign Indirect Investments
4. Foreign Aid
5. Foreign Tourist Expenditures
6. Domestic Tourism Expenditures
Choose the correct option from the codes given below:
[A] 1, 2, 3, 4, 5 & 6
[B] Only 1, 2 & 5
[C] Only 2, 3, 4 & 5
[D] Only 1, 2, 3, 4 & 5
Show Answer
Correct Answer: D [ Only 1, 2, 3, 4 & 5 ]
Notes:
The balance of payments (BOP) records all economic transactions between residents of a country and the rest of the world over a specific period. It includes: 1. Balance of Trade: The difference between exports and imports of goods and services. 2. Foreign Direct Investments (FDI): Investments made by a company or individual in one country in business interests in another country. 3. Foreign Indirect Investments: Investments in financial assets in another country, such as stocks and bonds. 4. Foreign Aid: Financial assistance given by one country to another. 5. Foreign Tourist Expenditures: Money spent by foreign tourists in the host country. Domestic Tourism Expenditures are not included in the BOP as they pertain to internal transactions. Thus, the correct answer is “Only 2, 3, 4 & 5.”
15. Why the Core inflation is considered to be a better indicator than the headline inflation?
[A] Core Inflation includes certain items that are subject to sudden and short-lived price movements
[B] Core Inflation excludes certain items that are subject to sudden and short-lived price movements
[C] Core inflation has a wider basket of items
[D] Headline Inflation has a wider basket of items
Show Answer
Correct Answer: B [ Core Inflation excludes certain items that are subject to sudden and short-lived price movements ]
Notes:
Core Inflation is the rate of inflation calculated to exclude certain items that are subject to sudden and short-lived price movements, mainly food and energy. Core inflation is considered a better indicator of overall long-term than un-adjusted headline inflation.
16. For a healthy growth of service sector, what should government do?
[A] Increase minimum wages
[B] Provide broadband services in rural areas
[C] Provide tax sops to infrastructure companies
[D] Revive growth in farm and industrial sectors
Show Answer
Correct Answer: D [ Revive growth in farm and industrial sectors ]
Notes:
This question is based upon last year’s Economic Survey documents. It is based on the premise that the growth in tertiary sector cannot thrive if there is no growth in primary and secondary sector. Due to inter-sectoral linkages; revival of growth in services depends on growth revival in commodity producing sectors.
17. Which committee is responsible for identifying out the criteria for the urban poor or urban BPL families?
[A] Hashim Committee
[B] Naresh Chandra Committee
[C] Sachar Committee
[D] Bhure Lal Committee
Show Answer
Correct Answer: A [ Hashim Committee ]
Notes:
Hashim Committee gave the criteria for identifying the urban poor or urban BPL families. The committee based its identification criteria on the parameters that were mapped by the Socio-Economic Caste Census (SECC).
18. Consider the following statements about Global Hunger Index (GHI):
- The report is published annually by the World Health Organization (WHO)
- As per the report, child stunting is the major reason behind India’s poor rank in GHI report
Which of the above statements is/are correct?
[A] 1 Only
[B] 2 Only
[C] Both 1 & 2
[D] Neither 1 nor 2
Show Answer
Correct Answer: B [ 2 Only ]
Notes:
First statement is incorrect because the report is published annually by the International Food Policy Research Institute (IFPRI). The GHI is calculated by taking into account four key parameters: shares of undernourished population, wasted and stunted children aged fewer than 5, and infant mortality rate of the same age group. As per the report, child stunting in India is the major reason behind India’s worse ranking in the report.
19. Which of the following are used as tool for the Liquidity adjustment facility (LAF)?
- Repo Rate
- Reverse Repo Rate
- Cash Reserve Ratio
- Statutory liquidity ratio
Select the correct option from codes given below:
[A] 1 & 2 Only
[B] 3 & 4 Only
[C] 1, 2 & 3 Only
[D] 1, 2, 3 & 4
Show Answer
Correct Answer: A [ 1 & 2 Only ]
Notes:
Liquidity adjustment facility (LAF) is a monetary policy tool which allows banks to borrow money through repurchase agreements. It consists of Rep and Reverse Repo Rate.
20.
Which among the following statement in context with the Indirect Taxes is correct?
[A]
They decrease as the value of the manufactured goods go up
[B]
They don’t become part of Consolidated Fund of India
[C]
They don’t differentiate between rich and poor
[D]
Most governments prefer to raise their revenues through indirect taxes
Show Answer
Correct Answer: C [
They don’t differentiate between rich and poor
]
Notes:
Indirect tax is essentially a tax on expenditure. Levies such as customs, excise and service tax / GST are examples of indirect taxes. They are considered regressive as they do not distinguish between the rich and the poor. So, most governments prefer to raise their revenues through direct taxes.