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. The act of simultaneous buying and selling of securities, currency, or commodities in different markets or in derivative forms is called _?
[A] Arbitrage
[B] Spot market
[C] Ambush marketing
[D] Futures market
Show Answer
Correct Answer: A [ Arbitrage ]
Notes:
Arbitrage is the process of simultaneous buying and selling of an asset from different platforms, exchanges or locations to cash in on the price difference. While getting into an arbitrage trade, the quantity of the underlying asset bought and sold should be the same. Only the price difference is captured as the net pay-off from the trade.
12. What is the resource curse in economic terms?
[A] A country with large resources but lack technology to exploit them
[B] Export from resource-rich countries increases currency value and hurts other sectors
[C] Countries with large reserves but only short-term market gains
[D] A paradox where resource-rich countries lack economic growth
Show Answer
Correct Answer: D [A paradox where resource-rich countries lack economic growth]
Notes:
Resource curse refers to the paradox where nations rich in natural resources tend to experience low economic growth, poor governance, and greater instability. Examples include Nigeria, where oil wealth has resulted in economic and political challenges. The term was first coined in 1993 by economist Richard Auty. The phenomenon is studied in the context of various minerals including oil, diamonds, and other extractive industries.
13. Which of the following are money markets instruments?
[A] A 14-day repurchase agreement of Treasury 8% 2007
[B] A treasury bill with 7 days to maturity
[C] A 3-month certificate of deposit
[D] All of the above
Show Answer
Correct Answer: D [ All of the above ]
Notes:
The short-term debts and securities sold on the money markets—which are known as money market instruments—have maturities ranging from one day to more.
14. Which statement accurately describes the Rolling Plan in economic planning? (UPSC Prelims 1980).
[A] Plan for full 5 years
[B] Formulation of annual plans
[C] Perspective of Five-Year Plan with annual extension for constant 5-year horizon
[D] Aims and achievements reviewed yearly in a Five-Year Plan
Show Answer
Correct Answer: C [Perspective of Five-Year Plan with annual extension for constant 5-year horizon]
Notes:
The Rolling Plan, introduced in 1978 by India, provided a flexible planning method by extending the plan each year, maintaining a constant five-year horizon. This system allowed for annual adjustments in targets and allocations, replacing the rigid fixed Five-Year Plans previously followed.
15. NABARD, which is set up to provide loans for rural development, belongs to which of the following categories? (UPSC Prelims 1982)
[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.
16. Which is a major drawback of capital-intensive industries? (UPSC Prelims 1982)
[A] High flexibility in demand adjustment
[B] Increased unemployment from automation
[C] Lower initial investment costs
[D] More worker innovation opportunities
Show Answer
Correct Answer: B [Increased unemployment from automation]
Notes:
Capital-intensive industries use automated machinery for production, as seen in sectors like automobile manufacturing. Automation reduces the need for human labor. This leads to displacement of workers, causing structural unemployment. In 2022, India’s manufacturing sector showed a trend toward greater automation. Labor-intensive industries offer more jobs, while capital-intensive ones contribute to unemployment.
17. Which is a non-conventional energy source in rural India? (UPSC Prelims 1988)
[A] Fuel wood
[B] Cow-dung cake
[C] Solar mini-grids
[D] Agricultural residue burning
Show Answer
Correct Answer: C [Solar mini-grids]
Notes:
Solar mini-grids use solar photovoltaic panels to generate electricity. They are classified as non-conventional energy sources in India. Distributed renewable energy initiatives have installed solar mini-grids in rural areas under government schemes. Solar energy is renewable and does not emit greenhouse gases. By June 2024, multiple villages in India have been electrified using solar mini-grids. Solar power is not traditional in Indian rural energy use.
18. Which of the following countries follow a Socialist Economic model?
[A] India and China
[B] China and Russia
[C] Japan and Russia
[D] India and Japan
Show Answer
Correct Answer: B [China and Russia]
Notes:
In China and Russia, most decisions were made by the central government. This type of economy was the core of the communist philosophy. So both these economies are based on the socialist model. (Note: As of 2026, China maintains its socialist market economy under the Communist Party, while Russia retains centralized state control in key sectors despite market reforms.)
19. In which year, Goods & Services Tax was introduced in India?
[A] 2017
[B] 2016
[C] 2018
[D] 2019
Show Answer
Correct Answer: A [2017]
Notes:
Goods and Services Tax was launched on July 1, 2017. It is an indirect tax used in India on the supply of goods and services.
20. Which factor is NOT a main reason India is a developing country in 2026?
[A] Rural population depends on agriculture
[B] Lack of rapid industrialization
[C] Scarcity of capital
[D] High per capita income
Show Answer
Correct Answer: D [High per capita income]
Notes:
India is still classified as developing due to low per capita income. Agriculture dependence, limited industrialization, and scarce capital are other reasons. Despite rapid growth, India’s per capita income remains well below high-income thresholds, keeping it in the developing country category per World Bank standards.
