MCQs On Indian Economy
1. With reference to the GINI Coefficient, consider the following statements:
- It can be used to measure the wealth distribution among a population.
- The score of 0 represents perfect inequality and the score of 1 represents perfect equality.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer : (a)
2. The 15th Finance Commission has suggested shifting which of the following State subjects to the Concurrent List of the 7th Schedule?
(a) Health
(b) Agriculture
(c) Public Order
(d) Betting and Gambling
Answer : (a)
3. Which of the following is responsible for implementation of PM-Jan Arogya Yojana?
(a) National Health Authority
(b) National Health Mission
(c) NITI Aayog
(d) None of the above
Answer : (a)
4. Consider the following statements:
- The FDI in the defense sector has been increased from 49 percent to 74 percent through automatic route.
- Mauritius has been the largest source of FDI in India in FY20.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer : (a)
5. Which of the following has launched GIS-enabled Land Bank System:
(a) Ministry of Panchayati Raj and Rural Development
(b) Ministry of Road Transport and Highways
(c) Ministry of Commerce
(d) National Bank for Agriculture and Rural Development
Answer : (c)
6. Consider the following statements about the Consolidated Sinking Fund:
- The Consolidated Sinking Fund is managed by the Reserve Bank of India.
- The purpose of this fund is to strengthen the crisis response of the Union Government.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer : (a)
7. Lessor and Lessee is a relationship between a bank and its customer in which of the following?
(a) Cash Deposits
(b) Loans
(c) Securities
(d) Safe Deposit Locker
Answer : (d)
8. If you withdraw 1,00,000 in cash from your Demand Deposit Account at your bank, the immediate effect on aggregate money supply in the economy will be
(a) to reduce it by 1,00,000
(b) to increase it by 1,00,000
(c) to increase it by more than 1,00,000
(d) to leave it unchanged
Answer : (d)
9. The cash reserve ratio refers to
(a) the share of Net Demand and time liabilities that banks have to hold as liquid assets
(b) the share of Net Demand and time liabilities that banks have to hold as balances with the RBI
(c) the share of Net demand and time liabilities that banks have to hold as part of their cash reserves
(d) the ratio of cash holding to reserves of banks
Answer : (b)
10. Which one of the following is not correct about the Repo rate?
(a) It is the interest rate charged by the Central Bank on overnight loan.
(b) It is the interest rate paid by the commercial banks on overnight borrowing.
(c) It is the interest rate agreed upon in the loan contract between a commercial bank and the Central Bank.
(d) It is the cost of collateral security.
Answer (c)
11. Which of the following banks is the World’s largest bank by assets?
(a) Bank of America
(b) Industrial and Commercial Bank of China (ICBC)
(c) BNP Paribas
(d) Bank of China
Answer (b)
12. Which one of the following is the correct sequence of formation of the Commissions starting from the earliest?
(a) Finance Commission, Planning Commission, Investment Commission, Election Commission
(b) Election Commission, Planning Commission, Finance Commission, Investment Commission
(c) Planning Commission, Election Commission, Finance Commission, Investment Commission
(d) Investment Commission, Finance Commission, Planning Commission, Election Commission
Answer (b)
13. The National Statistical Commission was established on the basis of the recommendations of which one of the following commissions/committees?
(a) Rangarajan Commission
(b) Lodha Commission
(c) Santhanam Committee
(d) M.G.K. Menon Committee
Answer (a)
14. According to Census of India, ‘Main Worker’ is a person who works for at least:
(a) 100 days in a year.
(b) 153 days in a year.
(c) 183 days in a year.
(d) 200 days in a year.
Answer (c)
15. Which one of the following statements appropriately describes the “fiscal stimulus”?
(a) It is a massive investment by the Government in manufacturing sector to ensure the supply of goods to meet the demand surge caused by rapid economic growth
(b) It is an intense affirmative action of the Government to boost economic activity in the country
(c) It is Government’s intensive action on financial institutions to ensure disbursement of loans to agriculture and allied sectors to promote greater food production and contain food inflation
(d) It is an extreme affirmative action by the Government to pursue its policy of financial inclusion
Answer (b)
16. Consider the following actions which the Government can take:
- Devaluing the domestic currency.
- Reduction in the export subsidy.
- Adopting suitable policies which attract greater FDI and more funds from FIIs.
Which of the above action/actions can help in reducing the current account deficit?
(a) 1 and 2
(b) 2 and 3
(c) 3 only
(d) 1 and 3
Answer (a)
17. Despite being a high saving economy, capital formation may not result in significant increase in output due to
(a) Weak administrative machinery
(b) Illiteracy
(c) High population density
(d) High capital output ratio
Answer (d)
18. If a commodity is provided free to the public by the government, then:
(a) The opportunity cost is zero.
(b) The opportunity cost is ignored.
(c) The opportunity cost is transferred from the consumers of the product to the tax paying public.
(d) The opportunity cost is transferred from the consumers of the product to the government.
Answer (c)
19. What does venture capital mean?
(a) A short-term capital provided to industries
(b) A long-term start-up capital provided to new entrepreneurs
(c) Funds provided to industries at times of incurring losses
(d) Funds provided for replacement and renovation of industries
Answer (b)
20. If the interest rate is decreased in an economy, it will
(a) Decrease the consumption expenditure in the economy
(b) Increase the tax collection of the Government
(c) Increase the investment expenditure in the economy
(d) Increase the total savings in the economy
Answer (c)
21. Which of following statement is true about the Primary deficit?
(a) It is difference between Revenue Receipts and Revenue Expenditure
(b) It is difference between Capital Receipts and Interest Payment
(c) It is difference between the Fiscal Deficit and Interest Payment
(d) It is addition of Fiscal Deficit and Interest Payment
Answer (c)
22. Consider the following statements in regard to Zero Base Budgeting (ZBB) :
(1) Existing Government programmes can be discarded under ZBB if they are found to be outdated.
(2) ZBB is difficult to be applied to Human Development programmes as the outcome of such programme is intangible in nature.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer (c)
23. Which of the following is not a part of India’s National Debt?
(a) National Savings Certificates
(b) Dated Government Securities
(c) Provident Funds
(d) Life Insurance Policies
Answer (d)
24. Which one of the following measures is not likely to aid in improving India’s Balance of Payment position?
(a) Promotion of Import Substitution Policy
(b) Devaluation of rupee
(c) Imposition of higher tariff on imports
(d) Levying of higher duties on exports
Answer (d)
25. Which of the following is associated with fiscal policy?
(a) Inflation
(b) Taxation
(c) Consumption
(d) Money supply
Answer (b)
26. ‘Fiscal Drag’ expresses the impact of inflation on which of the following ?
(a) Fiscal Deficit
(b) Tax Revenue and GDP
(c) Black money
(d) Investment
Answer (b)
27. Which of the following should be considered for ‘Pigovian taxation’?
(1) Consumption of cigarettes
(2) Research for new technologies
(3) Burning of fossil fuels
(4) Restoration of lost cultural heritage
Choose the correct answer using the codes given below:
(a) 1 and 3 only
(b) 2, 3 and 4 only
(c) 1, 2 and 3
(d) 2 and 4 only
Answer (a)
28. ‘Basel III’ norms target at which of the following?
(1) Improve the banking sector’s ability to absorb shocks arising from financial and economic stress.
(2) Improve risk management and governance.
(3) Strengthen banks’ transparency.
Choose the correct answer using the codes given below:
(a) 1 only
(b) 1 and 2 only
(c) 1 and 3 only
(d) 1, 2 and 3
Answer (d)
29. Which of the following is the characteristic of progressive tax?
(1) Marginal tax rate should be increasing.
(2) Marginal tax rates should be more than average tax rate.
Select the correct answer using the code given below:
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer (c)
30. The Minimum Alternative Tax (MAT) was introduced in the budget of the Government of India for the year?
(a) 1991-92
(b) 1992-93
(c) 1995-96
(d) 1996-97
Answer (d)
31. Which one of the following agencies assigns the Agricultural Income Tax to states in India?
(a) Inter – State council
(b) National Development Council
(c) Agriculture Finance Corporation
(d) Finance commission
Answer (d)
32. Which one of the following states is the first state to impose Agriculture Income Tax in India?
(a) Madhya Pradesh
(b) Uttar Pradesh
(c) West Bengal
(d) Bihar
Answer (d)
33. The representation of the relationship between possible rates of taxation and the resulting levels of government revenue is called
(a) Laffer curve
(b) Griffin curve
(c) Philips curve
(d) Gini’s curve
Answer (a)
34. Which one of the following is not a tax/duty levied by the Government of India?
(a) Service Tax
(b) Education
(c) Custom Duty
(d) Toll Tax
Answer (d)
35. Which of the following Tax is levied by Union and collected and appropriated by States?
(a) Stamp Duties
(b) Passenger and Goods Tax
(c) Estate Duty
(d) Taxes on Newspapers
Answer (a)
36. Devaluation of currency leads to
(a) expansion of export trade
(b) contraction of import trade
(c) expansion of import substituting
(d) all of the above
Answer (d)
37. Which of the following terms is not a financial term?
(a) Investment
(b) Core banking solution
(c) RTGS
(d) All the above
Answer (d)
38. Money laundering normally involves
(a) placement of funds
(b) layering of funds
(c) integration of funds
(d) all the above
Answer (d)
39. In which of the following years India switched over to decimal currencies?
(a) 1955
(b) 1956
(c) 1957
(d) 1960
Answer (c)
40. In which year the Indian rupee was devalued two times within a month?
(a) 1990
(b) 1991
(c) 1994
(d) 1999
Answer (b)
41. The one rupee note bears the signature of the
(a) Secretary, Ministry of Finance
(b) Governor, RBI
(c) Finance Minister
(d) None of these
Answer (a)
42. Which of the following is not true when the interest rate in the economy goes up?
(a) Saving increases
(b) Lending decreases
(c) Cost of production increases
(d) Return on capital increases
Answer (d)
43. Paper currency first started in India in
(a) 1861
(b) 1542
(c) 1601
(d) 1880
Answer (a)
44. Which of the following does not grant any tax rebate?
(a) National Saving Certificate
(b) Indira Vikas Patra
(c) National Saving Scheme
(d) Public Provident Fund
Answer (b)
45. If all the banks in an economy are nationalized and converted into a monopoly bank, the total deposits
(a) will decrease
(b) will increase
(c) will neither increase nor decrease
(d) None of the above
Answer (c)
46. Consider the following liquid assets:
- Demand deposits with the banks
- Time deposits with the banks
- Savings deposits with the banks
- Currency
The correct sequence of these decreasing orders of Liquidity is:
(a) 1-4-3-2
(b) 4-3-2-1
(c) 2-3-1-4
(d) 4-1-3-2
Answer (d)
47. The Rural infrastructure fund set up in 1995 – 96, is maintained by the
(a) Reserve Bank of India
(b) State Bank of India
(c) NABARD
(d) Regional Rural Bank
Answer (c)
48. The word “Actuaries” is related to
(a) Banking
(b) Insurance
(c) Share-market
(d) None of the above
Answer (b)
49. The value of money varies
(a) directly with the, interest rate
(b) directly with the price level
(c) directly with the volume of employment
(d) inversely with the price level
Answer (d)
50. Which of the following is /are example (s) of ‘Near Money’?
- Treasury Bill
- Credit Card
- Saving accounts and small time deposits
- Retail money market mutual funds
Select the correct answer using the code given below:
(a) 1 only
(b) 2 only
(c) 1, 2 and 3
(d) 1, 3 and 4
Answer (d)
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