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. Which of the following indicates a Liquidity trap?
[A] expansionary monetary policy does not encourage economic growth
[B] open market operations results in decrease in interest rates
[C] government prefers fiscal policies over monetary policies to regulate the money supply
[D] government undergoes liquidation of the government holdings on larger-scale to reduce fiscal deficit
Show Answer
Correct Answer: A [ expansionary monetary policy does not encourage economic growth ]
Notes:
Liquidity trap is a situation when expansionary monetary policy does not increase the interest rate, income and hence does not encourage the economic growth.
12. In context with Banking, which among the following is the nearest meaning of Amortization?
[A] Repayment of Principal and Interest
[B] Repayment of Principal
[C] Repayment of loan in one lump sum
[D] None of the above is a correct answer
Show Answer
Correct Answer: A [ Repayment of Principal and Interest ]
Notes:
Amortization refers to the gradual repayment of a loan over time through regular payments that cover both principal and interest. This process allows borrowers to pay off their debt in manageable installments rather than in a single lump sum. The term originates from the Latin “amortire,” meaning “to kill off,” reflecting the idea of reducing debt. In finance, amortization schedules detail each payment’s allocation towards interest and principal, providing clarity on the loan’s repayment structure.
13. The Mutual fund is constituted under the provisions of which of the following acts?
[A] The Securities and Exchange Board Of India Act,1992
[B] RBI Act,1934
[C] Indian Trusts Act,1882
[D] Indian Registration Act,1908.
Show Answer
Correct Answer: C [Indian Trusts Act,1882]
Notes:
The Mutual Fund is constituted as a trust in accordance with the provisions of the Indian Trusts Act, 1882 by the Sponsor. The trust deed is registered under the Indian Registration Act, 1908.
14. Which of the following is facilitated by Foreign Exchange Reserves?
[A] External trade
[B] Orderly development
[C] Maintenance of foreign exchange market
[D] All of the above
Show Answer
Correct Answer: D [All of the above]
Notes:
Foreign exchange reserves are crucial for a country’s economic stability. They facilitate external trade by providing the necessary currency for imports and exports. They also support orderly development by ensuring that a country can meet its international payment obligations. Additionally, reserves help maintain a stable foreign exchange market by allowing central banks to intervene in currency fluctuations. Countries like China and Japan hold important reserves to manage their economies effectively. Thus, the correct answer is “All of the above.”
15. In which of the following market forms a firm does not exercise control over price?
[A] Monopoly
[B] Mixed Competition
[C] Perfect competition
[D] Oligopoly
Show Answer
Correct Answer: C [Perfect competition]
Notes:
In economics, specifically general equilibrium theory, a perfect market is defined by several idealizing conditions, collectively called perfect competition.
16. Which organisation monitors the banks in actually maintaining cash balance?
[A] Department of Finance
[B] Department of Revenue
[C] Reserve Bank of India
[D] Banks themselves
Show Answer
Correct Answer: C [Reserve Bank of India ]
Notes:
The cash balance that is to be maintained by scheduled banks with the RBI should not be less than 4% of the total NDTL, which is the Net Demand and Time Liabilities. It includes deposits of the general public and the balances held by the bank with other banks.
17. What is the name given to the unemployment which occurs when workers move from one job to another job?
[A] Seasonal unemployment
[B] Frictional unemployment
[C] Technological unemployment
[D] Cyclical unemployment
Show Answer
Correct Answer: B [Frictional unemployment]
Notes:
Frictional unemployment is a type of unemployment. It is sometimes called search unemployment and can be based on the circumstances of the individual. It is time spent between jobs when a worker is searching for a job or transitioning from one job to another.
18. Three communicable diseases prevalent in developing countries caused by unsafe drinking water and bad sanitation are?
[A] acute diarrhoea, cancer and gout
[B] malaria, acute diarrhoea and schistosomiasis
[C] onchocerciasis, leukaemia and arthritis
[D] rheumatism, malaria and AIDS
Show Answer
Correct Answer: B [malaria, acute diarrhoea and schistosomiasis]
Notes:
Contaminated water can transmit diseases such as diarrhoea, schistosomiasis, cholera, dysentery, typhoid and polio. Malaria is caused by mosquitoes which develop in areas of bad sanitation.
19. Economic Survey in India is published officially, every year by which of the following authorities?
[A] Reserve Bank of India
[B] Planning Commission of India
[C] Ministry of Finance, Government of India
[D] Ministry of Industries, Government of India
Show Answer
Correct Answer: C [Ministry of Finance, Government of India]
Notes:
The Department of Economic Affairs, Finance Ministry of India presents the Economic Survey in the parliament every year, just before the Union Budget. It is prepared under the guidance of the Chief Economic Adviser, Finance Ministry. It is the ministry’s view on the annual economic development of the country.
20. Which sector comprises of the activities like exploitation of natural resources?
[A] Secondary
[B] Tertiary
[C] Primary
[D] Unorganised
Show Answer
Correct Answer: C [Primary]
Notes:
The exploitation of natural resources is part of the primary sector. The primary sector includes activities that are directly dependent on nature.
