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 among the following is correct in context with the White ATMs (Automated Teller Machines) ?
[A] ATMs owned by Foreign Companies
[B] ATMs not owned by banks but by private ATM service providers.
[C] Outsourced ATM Service by Banks – The ATM named under a brand sponsor bank but ATM machine not owned by the Bank
[D] ATMs owned by Government
Show Answer
Correct Answer: B [ATMs not owned by banks but by private ATM service providers.]
Notes:
‘White label ATM’: These are ATM’s which are not owned by banks but by private ATM service providers. Customers from any bank can deposit or
withdraw money from such ATMs. They will provide ATM services to customers of all banks. Such ATMs will be White Label Automated Teller Machines-WLAs and will provide ATM services to customers of all banks. WLA cannot charge customers.
12. What are the General Anti-Avoidance Rules?
[A] GAAR is a set of rules aimed at curbing aggressive tax planning
[B] GAAR is a set of rules aimed at curbing money laundering by Indians to Foreign countries
[C] GAAR is a set of rules aimed at regulating investments by Indians in foreign Countries
[D] GAAR is a set of rules aimed at regulating investments by Foreigners in India
Show Answer
Correct Answer: A [GAAR is a set of rules aimed at curbing aggressive tax planning]
Notes:
General Anti-Avoidance Rule or GAAR is a broad set of rules aimed at curbing aggressive tax planning. These rules will empower tax authorities to disregard any arrangement if its main purpose is to obtain tax benefit. The arrangement as a whole or in part may be disregarded and tax benefit denied.
13. Which among the following is a correct definition of the “Inflationary gap”?
[A] The difference between total spending at full employment level and total spending above that level.
[B] The difference between the price of a product at a time and price of that product at some different time
[C] Difference between the national expenditure and total expenditure
[D] Difference between Estimated fiscal deficit and actual fiscal deficit
Show Answer
Correct Answer: A [ The difference between total spending at full employment level and total spending above that level. ]
Notes:
The “inflationary gap” refers to the difference between total spending at full employment and total spending above that level. This occurs when demand exceeds the economy’s capacity to produce goods and services, leading to upward pressure on prices. Historically, inflationary gaps can result from excessive government spending or rapid economic growth, often leading to inflation. For example, during the 1970s, many economies experienced inflationary gaps due to oil price shocks and increased demand.
14. In context with banking in India, a Custodial Account is created for __:
[A] Illiterates
[B] Women
[C] Minor persons
[D] Senior Citizens
Show Answer
Correct Answer: C [ Minor persons ]
Notes:
A Custodial Account in India is specifically designed for minor persons, allowing adults to manage assets on behalf of minors until they reach the age of majority, which is 18 years. This type of account ensures that minors can benefit from investments and savings while being protected under legal guardianship. Custodial accounts are commonly used for educational savings and other financial planning purposes for children.
15. Which among the following represents a fall in the prices?
- Stagflation
- Disinflation
- Deflation
Select the correct option from the codes given below:
[A] Only 1 & 2
[B] Only 2 & 3
[C] Only 3
[D] Only 2
Show Answer
Correct Answer: C [ Only 3 ]
Notes:
Stagflation, as you might know is a condition when economy isn’t growing but prices are. So, this option would be opted out. Next two are disinflation and deflation. Disinflation means rise in prices has slowed down significantly as compared with the previous year. This simply implies that prices don’t fall during disinflation also. Deflation is when the prices actually fall. Kindly note that deflation usually moves hand in hand with economic slowdown, lower productivity and loss of employments.
16. Which of the following statements is correct about the Countervailing duty?
[A] It is the tariff levied on imported goods to offset subsidies offered by the exporting country to its producers
[B] It is the tariff imposed on exported goods to reduce exports and increase the domestic supply
[C] It is the tax levied on revenues received by a corporation, even if it does not make any profit
[D] It is the tax levied on purchase or sale of various financial products like stocks, derivatives, mutual funds etc
Show Answer
Correct Answer: A [ It is the tariff levied on imported goods to offset subsidies offered by the exporting country to its producers ]
Notes:
First option is the correct answer
Countervailing duty is a tariff imposed on imported goods to offset the subsidies offered by the exporting country to its producers. It is imposed to provide level playing field to domestic producers and foreign producers.
17. Micro credit or micro finance is a novel approach to bank with the poor. In this approach bank credit is extended to the poor through which of the follwing?
[A] Self Help Groups
[B] Anganwadees
[C] Co-operative Credit Societies
[D] RBI
Show Answer
Correct Answer: A [Self Help Groups]
Notes:
Microfinance is a category of financial services targeted at individuals and small businesses who lack access to conventional banking and related services.
18. Which among the following is not an instrument of fiscal policy?
[A] Public expenditure
[B] Taxation
[C] Credit Rationing
[D] Public debt
Show Answer
Correct Answer: C [Credit Rationing]
Notes:
Some of the major instruments of fiscal policy are Budget, Taxation, Public Expenditure, Public Works, Public Debt, etc. They consist of changes in government revenues or rates of the tax structure so as to encourage or restrict private expenditures on consumption and investment.
19. If capital stock is everlasting, what is the depreciation rate?
[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.
20. Which commodities do Middle East arid countries export to India?
[A] Raw wool and carpets
[B] Precious stones and pearls
[C] Fruits and palm oil
[D] Perfume and coffee
Show Answer
Correct Answer: C [Fruits and palm oil]
Notes:
Arid and semi-arid Middle Eastern countries mainly export fruits and palm oil to India, contributing to India’s food imports. Other Middle Eastern exports include dates, dry fruits, and edible oils; these products align with their agricultural output suited to arid climates.
