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 ‘expropriation’ mean in Foreign Direct Investment (FDI) context?
[A] Government seizes a foreign firm’s property, usually with compensation
[B] Investor acquires property rights in host country
[C] Estimating potential profits and returns from FDI
[D] Government bans profit repatriation to home country
Show Answer
Correct Answer: A [Government seizes a foreign firm’s property, usually with compensation]
Notes:
Expropriation is the act of a government forcibly taking control of assets owned by foreign investors. International law generally requires such action to serve a public purpose, follow due process, and involve prompt, adequate compensation at fair market value. Expropriation may be direct, such as transfer of title, or indirect, such as regulatory measures that remove economic value without actual seizure.
12. Which of the following is the distribution of the burden of paying a tax?
[A] Sharing of tax burden
[B] Shifting of the tax
[C] Incidence of a tax
[D] Tax capitalization
Show Answer
Correct Answer: C [Incidence of a tax]
Notes:
In economics, tax incidence or tax burden is the effect of a particular tax on the distribution of economic welfare. The introduction of a tax drives a wedge between the price consumers pay and the price producers receive for a product, which typically imposes an economic burden on both producers and consumers.
13. Which of the following curves represents the demand of all consumers in the market taken together at different levels of the price of the good?
[A] Monotonic
[B] Indifferent
[C] Market demand
[D] Diminishing
Show Answer
Correct Answer: C [Market demand]
Notes:
The market demand curve is the summation of all the individual demand curves in a given market. It shows the quantity demanded of the good by all individuals at varying price points.
14. Micro or Small Enterprise (as defined in the MSMED Act 2006) may be said to have become Sick, if?
[A] Any of the borrowal account of the enterprise remains NPA for ten months or more
[B] Any of the borrowal account of the enterprise remains NPA for eight months or more
[C] Any of the borrowal account of the enterprise remains NPA for five months or more
[D] Any of the borrowal account of the enterprise remains NPA for three months or more
Show Answer
Correct Answer: D [Any of the borrowal account of the enterprise remains NPA for three months or more]
Notes:
Micro or Small Enterprise (as defined in the MSMED Act 2006) may be said to have become Sick, if any of the borrowal account of the enterprise remains NPA for three months or more.
15. Which of the following is the management of securities of the corporate sector offered to the public on a regular basis?
[A] Corporate Issues Management
[B] Public Issues Management
[C] Securities Issues Management
[D] Private Issues Management
Show Answer
Correct Answer: B [Public Issues Management]
Notes:
Public Issue Management is the management of securities of the corporate sector offered to the public on a regular basis, and existing shareholders on a rights basis, is known as public issue management.
16. If capital stock is everlasting, what is the depreciation rate? (UPSC Prelims 1991)
[A] Zero
[B] High
[C] Low
[D] Infinite
Show Answer
Correct Answer: A [Zero]
Notes:
Everlasting capital stock does not lose value or efficiency, so the depreciation rate is zero as no part decreases in utility or worth over time.
17. What is the primary basis for defining a small-scale industry in India? (UPSC Prelims 1992)
[A] The market outreach of a unit
[B] The size of annual turnover
[C] Investment in plant and machinery
[D] Products listed by the Ministry of Industry
Show Answer
Correct Answer: C [Investment in plant and machinery]
Notes:
The MSME Development Act, 2006 defines small-scale industry based on investment in plant and machinery for manufacturing or equipment for services. The 2020 revision set the small enterprise limit at investment up to ₹10 crore and turnover up to ₹50 crore. Prior to this, only investment criteria were used in statutory definitions, excluding factors like sales or product lists.
18. Which one of the following statements regarding the levying, collecting and distribution of Income Tax is correct? (UPSC Prelims 1999)
[A] The Union levies, collects and distributes the proceeds of income-tax between itself and the States
[B] The Union levies, collects and keeps all the proceeds of income-tax to itself
[C] The Union levies and collects the tax but all the proceeds are distributed among the States
[D] Only the surcharge levied on income-tax is shared between the Union and the States
Show Answer
Correct Answer: A [The Union levies, collects and distributes the proceeds of income-tax between itself and the States]
Notes:
Article 270 permitted mandatory sharing of the net proceeds of income tax levied and collected by the Union with the States. Such proceeds assigned to States did not form part of the Consolidated Fund of India. Article 272 provided for sharing of Union excise duties, if Parliament by law so provided.
19. Which economist is credited for developing theories based on Gandhism?
[A] Jagadish Bhagwati
[B] P.C.Mehalonibis
[C] J.C.Kumarappa
[D] Kaushik Basu
Show Answer
Correct Answer: C [J.C.Kumarappa]
Notes:
J.C.Kumarappa was an Indian economist and a close associate of Gandhiji. A pioneer of rural economic development theories, Kumarappa is credited for developing economic theories based on Gandhism– a school of economic thought he coined “Gandhian Economics”.
20. Which among the following countries have traditional economic system?
[A] India
[B] USA
[C] Germany
[D] None of the above
Show Answer
Correct Answer: D [None of the above]
Notes:
This traditional economy is suited to underdevelop and developing economies. Even today such economies can be found in some pockets of Africa and the Middle East. India and Germany follows a mixed economic system while USA follows capitalist system.
