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 these is used as promise from a bank to make a payment assuming certain conditions are met?
[A] Cash Credit
[B] Over Draft
[C] Letter of Credit
[D] Term Loan
Show Answer
Correct Answer: C [Letter of Credit]
Notes:
A letter of credit is a letter from a bank guaranteeing that a buyer’s payment to a seller will be received on time and for the correct amount.
12. The demand for heavy loans can lead to which situation for banks?
[A] Improved bank cost efficiency through scale economies
[B] Liquidity constraints and solvency risks for banks
[C] Reduced need for risk management systems
[D] Automatic increases in bank capital reserves
Show Answer
Correct Answer: B [Liquidity constraints and solvency risks for banks]
Notes:
Heavy loan demand can strain a bank’s available liquid assets, increasing the risk of liquidity shortfall. High loan volumes, if unmatched by equivalent growth in capital or asset quality, can adversely impact the solvency position of banks. The Basel III regulatory framework emphasizes maintenance of adequate capital buffers to absorb credit risk and liquidity shocks. Instances of aggressive loan growth have historically preceded bank distress during financial crises.
13. Which crop has the lowest international trade compared to total global production?
[A] Rice
[B] Coffee
[C] Rubber
[D] Wheat
Show Answer
Correct Answer: A [Rice]
Notes:
In 2023–2024, global rice production was about 520 million metric tons. International rice trade accounts for less than 10 percent of total production. Rice is mainly consumed domestically in producing countries such as China and India. The largest exporters export a small share of total production. Rice is a staple for over half the world’s population, contributing to low export volumes.
14. Which Asian country imposes a Sustainable Development Fee (SDF) on tourists to support conservation and infrastructure?
[A] Thailand
[B] Bhutan
[C] Cambodia
[D] Sri Lanka
Show Answer
Correct Answer: B [Bhutan]
Notes:
Bhutan is the correct answer. The country follows a ‘high value, low volume’ tourism policy and charges a Sustainable Development Fee from visitors to help finance environmental protection, cultural preservation, and infrastructure development. The current standard SDF is US$100 per person per night for most foreign visitors, while Indian nationals pay a preferential rate of Nu./INR 1,200 per person per night. This fee is a key part of Bhutan’s tourism model.
15. When does a monopoly by a specific business entity occur in the market?
[A] When there are numerous buyers and sellers
[B] When homogeneous products flood the market
[C] When a distinctive product is exclusively sold by a single seller
[D] When firms are merely price takers
Show Answer
Correct Answer: C [When a distinctive product is exclusively sold by a single seller]
Notes:
A monopoly exists when a specific entity is the sole supplier of a particular commodity. This market condition can only occur if the unique product is exclusively sold by one seller, eliminating any form of direct competition. It is regulated by certain laws to prevent marketplace inefficiency. However, a monopoly can lead to innovation as other companies strive to create an alternative or similar product.
16. What is subtracted from Gross Value Added to get Net Value Added?
[A] Depreciation
[B] Value added
[C] Production flow
[D] Investment
Show Answer
Correct Answer: A [Depreciation]
Notes:
Net Value Added is obtained by subtracting depreciation from Gross Value Added. Depreciation represents the wear and tear or consumption of fixed capital during the production process. It is a key measure in national income accounting.
17. Who is the founder of Madras School of Economics?
[A] Dr.Manmohan Singh
[B] Dr.P.C.Mahalonibis
[C] Dr.Raja Chelliah
[D] Dr.C.Rangarajan
Show Answer
Correct Answer: C [Dr.Raja Chelliah]
Notes:
The founder and Chairman of Madras School of Economics, Dr. Raja Jesudoss Chelliah was one of the top economists this country has produced.
18. Who is the author of “Volatility and Growth”?
[A] Esther Duflo
[B] Amartya Sen
[C] Abhijit Banerjee
[D] Jagadish Bhagwati
Show Answer
Correct Answer: C [Abhijit Banerjee]
Notes:
Abhijit Banerjee is the author of “Volatility and Growth”. It has long been recognized that productivity growth and the business cycle are closely interrelated.
19. Who among the following is not part of the Quinary sector?
[A] Scientist
[B] Lawyer
[C] Financial consultant
[D] Florist
Show Answer
Correct Answer: D [Florist]
Notes:
The quinary sector is the part of the economy where the top-level decisions are made. This includes the government which passes legislation. It also comprises the top decision-makers in industry, commerce, and also the education sector. Floriculture comes under Primary Sector.
20. When was Tata Iron and Steel Company (TISCO) formally established and registered?
[A] 1906
[B] 1907
[C] 1908
[D] 1909
Show Answer
Correct Answer: B [1907]
Notes:
TISCO was officially established and registered on 26 August 1907 at Jamshedpur, Jharkhand by Jamsetji Tata. Renamed Tata Steel Limited in 2005, it was a pivotal venture in India’s industrialization. The first steel production started in 1912. Headquartered in Mumbai, it is part of the Tata Group.
