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 the following indicates a Liquidity trap?
[A] expansionary monetary policy does not encourage economic growth
[B] open market operations results in decrease in interest rates
[C] government prefers fiscal policies over monetary policies to regulate the money supply
[D] government undergoes liquidation of the government holdings on larger-scale to reduce fiscal deficit
Show Answer
Correct Answer: A [ expansionary monetary policy does not encourage economic growth ]
Notes:
Liquidity trap is a situation when expansionary monetary policy does not increase the interest rate, income and hence does not encourage the economic growth.
12. 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.
13. Which of the following Organisations collects data for the unorganized sector?
[A] CSO
[B] NSSO
[C] ASI
[D] RBI
Show Answer
Correct Answer: B [ NSSO ]
Notes:
The National Sample Survey Office (NSSO) headed by a Director General is responsible for conduct of large scale sample surveys in diverse fields on All India basis. Primarily data are collected through unorganized sector.
14. Banking Ombudsman is a senior official appointed by the RBI to redress customer complaint specified under which clause of the Banking Ombudsman Scheme 2006?
[A] Clause 7
[B] Clause 6
[C] Clause 8
[D] Clause 5
Show Answer
Correct Answer: C [Clause 8]
Notes:
The Banking Ombudsman is a senior official appointed by the Reserve Bank of India to redress customer complaints against deficiency in certain banking services covered under the grounds of complaint specified under Clause 8 of the Banking Ombudsman Scheme 2006.
15. What is a free good?
[A] Opportunity cost = Maximum
[B] Opportunity cost = Negative
[C] Opportunity cost = 0
[D] A good which is freely available to all
Show Answer
Correct Answer: C [Opportunity cost = 0]
Notes:
A free good is a good with zero opportunity cost. This means it can be consumed in as much quantity as needed without reducing its availability to others. For Example sunlight, ideas, music or air.
16. Who is the author of “Poverty and Famines”?
[A] Abhijit Banerjee
[B] J.R.Harris
[C] Amartya Sen
[D] K.N.Raj
Show Answer
Correct Answer: C [Amartya Sen]
Notes:
Amartya Sen’s “Poverty and Famines”, an essay by Sen on Entitlement and Deprivation (1981) is both theoretical and applied for work. In the essay, several famines have been studied in the working of a general theoretical framework from an original angle. He examined various meanings of poverty and drew attention to the incidence of absolute and relative deprivation.
17. Who determines prices in a capitalist economy?
[A] Government
[B] Market forces
[C] Big corporates
[D] None of the above
Show Answer
Correct Answer: B [Market forces]
Notes:
In a capitalist economy, prices are set by demand and supply, collectively known as market forces. Government intervention is minimal. Prices fluctuate based on consumer preference and availability of goods, ensuring efficient allocation of resources within the economy.
18. The classification of Sectors in an economy into the public and privates sector is on the basis of which of the following?
[A] On the basis of activity
[B] On the basis of work condition
[C] On the basis of Ownership
[D] None of the above
Show Answer
Correct Answer: C [On the basis of Ownership]
Notes:
On the basis of ownership, the economy is divided into public and private sectors. The public sector is owned by the government whereas the private sector is owned by Private individuals.
19. Which sector contributed most to India’s National Income in 2025-26?
[A] Unorganised
[B] Public
[C] Organised
[D] None of the above
Show Answer
Correct Answer: A [Unorganised]
Notes:
The unorganised sector dominates India’s national income, with over 31 crore registered workers as of Jan 2026. GVA per establishment nearly doubled between 2010-11 and 2023-24. Unorganised sector accounts for a majority workforce, especially in services, reflecting ongoing structural shifts in India’s economy.
20. When was the 2nd Rolling plan introduced?
[A] 1976-77
[B] 1978-79
[C] 1980-81
[D] 193-84
Show Answer
Correct Answer: B [1978-79]
Notes:
After Morarji Desai came to power he started with an annual plan for 1978-79 and as a continuation of the terminated fifth-five year plan.
