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. What is the purpose of Ways and Means Advances scheme?
[A] to give insurance to the large corporates for their investment in abroad projects
[B] to handle the mismatch between cash flow of the receipts and payments of the State Governments
[C] to promote export oriented projects by giving interest free credit
[D] None of the above
Show Answer
Correct Answer: B [to handle the mismatch between cash flow of the receipts and payments of the State Governments]
Notes:
Ways and means advances (WMA) is a mechanism used by Reserve Bank of India (RBI) to help the states tide over temporary mismatches in the cash flow of their receipts and payments.
12. Who among the following is a banking corresponding agent?
[A] An authorized representative of bank who offer banking services in unbanked areas
[B] Any person who offer banking services in unbanked areas
[C] An authorized representative of bank who makes profits for banks
[D] None of the above
Show Answer
Correct Answer: A [An authorized representative of bank who offer banking services in unbanked areas]
Notes:
Business Correspondents are retail agents engaged by banks for providing banking services at locations other than a bank branch/ATM. BCs enable a bank to provide its limited range of banking services at low cost.
13. Which of the following is called GDP Deflator?
[A] Ratio of nominal to real GNP
[B] Ratio of nominal to real CPI
[C] Ratio of real to nominal GNP
[D] Ratio of nominal to real GDP
Show Answer
Correct Answer: D [Ratio of nominal to real GDP]
Notes:
The GDP deflator is a measure of price inflation. It is calculated by dividing Nominal GDP by Real GDP and then multiplying by 100. Nominal GDP is the market value of goods and services produced in an economy, unadjusted for inflation
14. Which out of the following is most popular channel of foreign inward remittances to India?
[A] SWIFT
[B] Rupee Drawing Arrangement (RDA)
[C] Direct transfers
[D] Cheques and Drafts
Show Answer
Correct Answer: B [Rupee Drawing Arrangement (RDA)]
Notes:
The rupee drawing arrangement (RDA) is the most popular channel of remittances which accounts for 75.2 per cent of remittances, followed by SWIFT (19.5 per cent), direct transfers (3.4 per cent) and cheques and drafts (1.9 per cent)
15. Which of the following is the purchase of bonds and shares of Indian companies by Foreign Institutional investors?
[A] FDI
[B] NRI investment
[C] Portfolio investment
[D] Foreign indirect investment
Show Answer
Correct Answer: A [FDI]
Notes:
A foreign direct investment (FDI) is an investment in the form of a controlling ownership in a business in one country by an entity based in another country.
16. Which of the following is the cause of inflation?
[A] Increase in money supply
[B] Fall in production
[C] Increase in money supply and fall in production
[D] Decrease in money supply and fall in production
Show Answer
Correct Answer: C [Increase in money supply and fall in production]
Notes:
Inflation is a situation of a sustained increase in the general price level in an economy.
There are two main causes of inflation: Demand-pull and Cost-push. Both are responsible for a general rise in prices in an economy.
Cost-push occurs when supply cost force prices higher. If the inflation in an economy is of the cost-push type, then the inflationary situation usually leads to a fall in production.
Demand-pull inflation is used by Keynesian economics to describe the price levels rise because of an imbalance in the aggregate supply and demand. When the aggregate demand in an economy strongly outweighs the aggregate supply, prices go up.
17. Three communicable diseases prevalent in developing countries caused by unsafe drinking water and bad sanitation are?
[A] acute diarrhoea, cancer and gout
[B] malaria, acute diarrhoea and schistosomiasis
[C] onchocerciasis, leukaemia and arthritis
[D] rheumatism, malaria and AIDS
Show Answer
Correct Answer: B [malaria, acute diarrhoea and schistosomiasis]
Notes:
Contaminated water can transmit diseases such as diarrhoea, schistosomiasis, cholera, dysentery, typhoid and polio. Malaria is caused by mosquitoes which develop in areas of bad sanitation.
18. What restricts the spending of a person in a market?
[A] Marginal Utility
[B] Purchasing power
[C] Demand curve
[D] None of the above
Show Answer
Correct Answer: B [Purchasing power]
Notes:
The purchasing power of a person is the reason for his limited spending. He has budget constraints which inturn affect the market as a whole. The budget constraint is used to analyze consumers choices.
19. Which Economist is the first Vice-Chairman of NITI Aayog?
[A] Araving Panagariya
[B] Amartya Sen
[C] Rajiv Kumar
[D] Arvind Subramaniyan
Show Answer
Correct Answer: A [Araving Panagariya]
Notes:
Arvind Panagariya is an Indian-American economist and a professor of economics at Columbia University, who served as the first vice-chairman of the think-tank Niti Aayog between January 2015 and August 2017.
20. Capitalist economic system is the feature of which of these countries?
[A] USA
[B] China
[C] Russia
[D] India
Show Answer
Correct Answer: A [USA]
Notes:
USA has a capitalist system followed in its economy. The prices are controlled by the market forces of demand and supply.
