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 statement best describes the term “Transfer Pricing” that India is contending with?
[A] It is a tax evasion method involving illicit capital flows out of the country
[B] It is a factor causing the continuous rise in food prices in India
[C] It is a recent phenomenon resulting in the bad loans of Indian banks
[D] It is a global phenomenon causing the devaluation of the Indian currency against reserve currencies
Show Answer
Correct Answer: A [It is a tax evasion method involving illicit capital flows out of the country]
Notes:
Transfer pricing refers to the pricing of goods or services within a multinational corporation or group. These transactions may not be influenced by market forces that typically shape relations between individual firms. This system allows for a possible method of tax evasion, where one party transfers goods or services to another for a specific price, often facilitating illicit capital flows out of the country.
12. Which of the following activities can help to reduce the government’s budget deficit?
- Implementation of Goods and Services Tax (GST)
- Rationalization of Subsidies
- Reduction in Income Tax
Select the correct option from codes given below:
[A] 1 & 2 Only
[B] 3 Only
[C] 2 & 3 Only
[D] 1, 2 & 3
Show Answer
Correct Answer: A [ 1 & 2 Only ]
Notes:
Implementation of Goods and Services Tax (GST) could help government raise tax revenues and reduce fiscal deficit. Fiscal deficit can be reduced by rationalizing subsidies in different sectors. Reduction in Income Tax will reduce government’s earnings and hence will increase budget deficit.
13. Which of the following rate is charged by banks to their most credit worthy customers?
[A] Prime Lending Rate
[B] Repo Rate
[C] Statutory Liquidity Rate
[D] Bank Rate
Show Answer
Correct Answer: A [Prime Lending Rate]
Notes:
A prime rate or prime lending rate is an interest rate used by banks, usually the interest rate at which banks lend to favoured customers—i.e., those with good credit.
14. Which of the following is represented by ‘Lorenz Curve’?
[A] Inflation
[B] Income Distribution
[C] Employment
[D] Deflation
Show Answer
Correct Answer: B [Income Distribution]
Notes:
In economics, the Lorenz curve is a graphical representation of the distribution of income or of wealth. It was developed by Max O. Lorenz in 1905 for representing inequality of the wealth distribution.
15. Which of the following is true about NBFC?
[A] NBFC cannot accept demand deposits
[B] NBFCs cannot issue cheques drawn on itself
[C] Deposit insurance facility of DICGC is not available to depositors of NBFCs
[D] All are true
Show Answer
Correct Answer: D [All are true]
Notes:
All the three points mentioned above are true. These points differentiate NBFC and banks
16. Financial services offered financing risk project to provide which of the following?
[A] Seed capital
[B] Venture capital
[C] Primary fund
[D] Secondary fund
Show Answer
Correct Answer: B [Venture capital]
Notes:
Financial services offered financing risk project e.g. Risk capital scheme of I F C I venture capital fund of I D F I etc. to provide Venture capital.
17. Which economic system does the “Socialistic Pattern” evolve from?
[A] Free Economy
[B] Mixed Economy
[C] Public Sector
[D] None of the above
Show Answer
Correct Answer: B [Mixed Economy]
Notes:
The “Socialistic Pattern” is derived from the Mixed Economy system. In a mixed economic system, the features of both capitalism and socialism are amalgamated. It safeguards private property ownership and promotes certain economic liberty regarding capital usage. Yet, it also permits the government to meddle in economic activities to fulfill societal goals. This marriage of capitalism and socialism in a mixed economy paves the way for the emergence of the so-called “Socialistic Pattern”.
18. NABARD, which is set up to provide loans for rural development, belongs to which of the following categories?
[A] Bank
[B] Board
[C] Block
[D] Department
Show Answer
Correct Answer: A [Bank]
Notes:
NABARD stands for National Bank for Agriculture and Rural Development. It is an apex development financial institution in India. It is an institution fully owned by Government of India, headquartered at Mumbai with regional offices all over India.
19. For which of the following purpose World Bank loan is given?
[A] Make available the currency of a particular country in case of shortage
[B] Countries for sound projects for development purposes
[C] Improve the social and cultural conditions of a country
[D] None of these
Show Answer
Correct Answer: B [Countries for sound projects for development purposes]
Notes:
The World Bank provides low-interest loans, interest-free credit, and grants. It focuses on improving education, health, and infrastructure. It also uses funds to modernize a country’s financial sector, agriculture, and natural resources management.
20. Among the sources of energy listed below which one is non-conventional in present day rural India?
[A] Fuel wood
[B] Cow-dung cake
[C] Biogas
[D] Hydel
Show Answer
Correct Answer: C [Biogas]
Notes:
Biogas is the mixture of gases produced by the breakdown of organic matter in the absence of oxygen. Biogas can be produced from raw materials such as agricultural waste, manure, municipal waste, plant material, sewage, green waste or food waste. Biogas is a renewable energy source.
