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. Imposing an Import quota helps in__:
- correcting unfavourable balance of payments
- improving balance of trade
- protecting domestic industries
- promoting exports
Select the correct option from the codes given below:
[A] Only 1 & 2
[B] Only 1 & 3
[C] Only 1, 2 & 3
[D] 1, 2, 3 & 4
Show Answer
Correct Answer: C [ Only 1, 2 & 3 ]
Notes:
An import restriction imposed on imported goods, to reduce the quantity of certain goods allowed into a country from a particular exporting country, in a stated period. The purpose may be to conserve foreign currency, if there is an unfavourable balance of payments, or to protect the home market against foreign competition (see protective duty). Quotas are usually enforced by means of import licenses.
12. If a company has “Trade Receivables”, this implies that __:
[A] It has made a sale but yet to collect payments
[B] It has received payments but yet to make a delivery
[C] It has received an order but yet to make delivery
[D] None of the above is a correct definition
Show Answer
Correct Answer: A [ It has made a sale but yet to collect payments ]
Notes:
If a company has receivables, this means it has made a sale but has yet to collect the money from the purchaser.
13. Which statement about indirect taxes in India is correct?
[A] They decrease as value of goods increases
[B] They are not part of Consolidated Fund of India
[C] They apply same tax rate to all income groups
[D] Most governments avoid indirect taxes
Show Answer
Correct Answer: C [They apply same tax rate to all income groups]
Notes:
Indirect taxes such as GST and excise duties are levied at uniform rates regardless of the income level of the consumer. This results in all consumers, irrespective of their earning capacity, paying the same rate on goods and services. Indirect taxes are considered regressive for this reason. The tax rate is not linked to income or earning ability.
14. Which of these is a conventional source of energy? (UPSC Prelims 1987)
[A] Geothermal
[B] Coal
[C] Solar
[D] Wind
Show Answer
Correct Answer: B [Coal]
Notes:
Coal is a fossil fuel formed from plant remains over millions of years. It has been used extensively in thermal power plants. India is the second largest producer of coal as of 2023. Coal is classified as a non-renewable, conventional energy source. It primarily consists of carbon, hydrogen, oxygen, nitrogen, and sulfur.
15. What is Market equilibrium?
[A] Quantity demanded greater than quantity supplied
[B] Quantity demanded less than quantity supplied
[C] Quantity demanded equal to quantity supplied
[D] Quantity demanded is same as quantity produced
Show Answer
Correct Answer: C [Quantity demanded equal to quantity supplied]
Notes:
Market equilibrium is defined by equality between quantity demanded and quantity supplied in the market. The equilibrium price is the price of a good or service when the supply of it is equal to the demand for it in the market.
16. Which economist famously challenged the view that free markets automatically provide full employment?
[A] John Maynard Keynes
[B] J S Mill
[C] Milton Friedman
[D] Adam Smith
Show Answer
Correct Answer: A [John Maynard Keynes]
Notes:
John Maynard Keynes argued that market economies can settle at underemployment equilibrium, especially during downturns, so full employment is not guaranteed automatically. His ideas formed the basis of Keynesian economics and influenced modern macroeconomic policy, particularly during recessions.
17. Which of the economic system have the shortcoming of overproduction and over-exploitation of workers?
[A] Socialist system
[B] Mixed system
[C] Market system
[D] Traditional system
Show Answer
Correct Answer: C [Market system]
Notes:
In the market system or the capitalist system, there is always a risk of overexploitation of workers for the profits of the companies. A profit is the main motive of this type of economy. It also may lead to the overproduction of goods since there are no regulations. This can also be attributed to the fact that the workers have low wages and hence cannot afford to consume all the products that are being manufactured.
18. How much FDI is permitted in e-commerce in India?
[A] 75% in marketplace; 0% in inventory-based
[B] 100% in B2B and marketplace; 0% inventory-based
[C] 100% in all e-commerce models
[D] 51% in marketplace; 100% in B2B
Show Answer
Correct Answer: B [100% in B2B and marketplace; 0% inventory-based]
Notes:
India allows 100% FDI under the automatic route in B2B e-commerce and marketplace model since Press Note 3 (2016). FDI is not permitted in the inventory-based model. The marketplace model connects buyers and sellers without holding inventory. The restrictions were reiterated in Press Note 2 (2018). The Department for Promotion of Industry and Internal Trade regulates these FDI norms.
19. Which neighbouring country officially accepts Indian Rupee as legal tender?
[A] Bangladesh
[B] Pakistan
[C] Bhutan
[D] Myanmar
Show Answer
Correct Answer: C [Bhutan]
Notes:
The Indian Rupee is legal tender in Bhutan and Nepal. Bhutan’s ngultrum is pegged to INR, and both currencies circulate freely. Nepal also accepts INR, but only certain denominations. Other neighbours like Bangladesh, Pakistan, and Myanmar do not officially accept it as legal tender.
20. Which state has the highest Gross State Domestic Product (GSDP) in India?
[A] Kerala
[B] Maharashtra
[C] Telangana
[D] Punjab
Show Answer
Correct Answer: B [Maharashtra]
Notes:
Maharashtra’s GSDP is estimated at ₹42.67 lakh crore for 2024–25. Maharashtra accounts for nearly 14% of India’s GDP. It is the leading state for FDI inflows. Maharashtra’s GSDP is projected at Rs. 49.39 trillion (US$ 578.31 billion) in FY26. Tamil Nadu and Karnataka are ranked second and third, respectively, in GSDP by state-level economic data for 2025-26.
