Indian Economy MCQs
Indian Economy MCQs
1. A persistent fall in the general price level of goods and services is known as:
[A] Deflation [B] Disinflation [C] Stagflation [D] Depression
Ans: Deflation
Explanation: Inflation is a rise in the general price level. Deflation is a fall in the general price level, i.e., negative inflation.
2. If the demand and supply of a commodity increase by an equal absolute amount, what will be the effect on market price ?
[A] Increase [B] Decrease [C] Remain Stable [D] First decrease then increase
Ans: Remain Stable
Explanation: When demand and supply increase by the same absolute amount, the equilibrium price does not change; it remains stable.
3. In which of the following situations will “Investment” increase ?
[A] Increase in output and decrease in capital stock [B] Decrease in output and increase in capital stock
[C] Increase in output and increase in capital stock [D] Decrease in output and decrease in capital stock
Ans: Increase in output and increase in capital stock
Explanation: Higher output and rising capital stock lower real interest rates, encourage savings, and increase investment.
4. What is the main motive of the government behind having a dual price system & fair price shops ?
[A] To demote speculation and hoarding
[B] To incentivize trading of essential commodities
[C] To eliminate monopoly of traders and speculators
[D] To make essential commodities available to weaker sections of society
Ans: To make essential commodities available to weaker sections of society
Explanation: Fair price shops (ration shops) provide essential goods to people below poverty line at subsidized prices.
5. A country has a crude birth rate of 44 and crude death rate of 11. Immigrants > Emigrants. What is the rate of natural increase of population?
[A] 0.75% [B] 3.3% [C] 2.9% [D] Cannot be determined
Ans: 3.3%
Explanation: Natural Increase Rate = Crude Birth Rate – Crude Death Rate = 44 – 11 = 33 per 1000 population = 3.3%.
6. Which is the apex financial institution responsible for development of Micro, Small and Medium Enterprises in India?
[A] IDBI [B] SIDBI [C] NABARD [D] EXIM
Ans: SIDBI
Explanation: Small Industries Development Bank of India (SIDBI) supports the growth of micro, small, and medium enterprises.
7. Consider the following statements about the “PRASAD” scheme:
- Focuses on development and beautification of pilgrimage destinations
- Ministry of Tourism provides Central Financial Assistance (CFA) to states
[A] 1 Only [B] 2 Only [C] Both 1 & 2 [D] Neither 1 nor 2
Ans: Both 1 & 2
Explanation: PRASAD scheme develops 13 identified pilgrimage sites and provides CFA to states for tourism projects.
8. Which statement about indirect taxes is correct ?
[A] They decrease as the value of manufactured goods goes up
[B] They don’t become part of Consolidated Fund of India
[C] They don’t differentiate between rich and poor
[D] Most governments prefer raising revenue through indirect taxes
Ans: They don’t differentiate between rich and poor
Explanation: Indirect taxes (GST, customs, excise) are regressive, paid equally regardless of income.
9. If a company declares a 100% dividend, the shareholder will get an amount equal to:
[A] Face Value of the Share
[B] Market Value of the Share
[C] Previous dividend announced
[D] Face Value or Market Value, whichever is higher
Ans: Face Value of the Share
Explanation: Dividend percentage is based on the face value (par value), not the market price.
10. Financial Action Task Force (FATF) is most closely related to:
[A] Climate Change Finance [B] Terror Finance
[C] Quantum Finance [D] Development Finance
Ans: Terror Finance
Explanation: FATF develops policies to combat money laundering and terrorist financing globally.
11. What does the term “resource curse” refer to in economics ?
[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
Ans: A paradox where resource-rich countries lack economic growth
Explanation: The “resource curse” is the paradox where countries rich in natural resources often experience slower economic growth, weak governance, and higher conflict. Examples: Nigeria and Venezuela, where oil wealth has led to instability rather than prosperity.
12. Which of these cannot be issued by a Payment bank ?
[A] ATM card [B] Debit card [C] Credit card [D] All of the above
Ans: Credit card
Explanation: Payment banks can issue ATM and debit cards but not credit cards. They can also issue other prepaid payment instruments.
13. Consider the Food Pyramid showing the interdependence of plants and animals in the food chain. Which one is most delicately balanced in the chain?
[A] Herbivore [B] Plant [C] Top Carnivore [D] Small Carnivore
Ans: Top Carnivore
Explanation: Top carnivores are most delicately balanced because they depend on the survival of lower levels (plants → herbivores → small carnivores) for food, making their position in the chain sensitive to ecosystem changes.
14. Under what conditions is Proportional Representation NOT necessary in a country ?
[A] There are no reserved constituencies [B] A two-party system has developed
[C] The first-past-the-post system prevails [D] There is a fusion of Presidential and Parliamentary forms of government
Ans: A two-party system has developed
Explanation: Proportional representation ensures all groups get representation, mostly in multi-party systems. In a two-party system, seats naturally divide between the two major parties, so proportional representation is not needed.
15. What is the aggregate of the gross balances of primary income of all resident institutional units known as ?
[A] Gross Domestic Product [B] Gross National Product
[C] Gross National Income [D] Net National Product
Ans: Gross National Income
Explanation: GNI aggregates the gross primary incomes of all resident institutional units, measuring total income earned by a country’s residents, domestically and abroad.
16. Which of the following is included in market price ?
[A] Indirect taxes [B] Direct taxes
[C] Subsidies [D] None of the above
Ans: Indirect taxes
Explanation: Market price includes indirect taxes (GST, excise, customs) because it represents the actual transaction price between buyer and seller.
17. Who is the father of the White Revolution in India?
[A] M.S. Swaminathan [B] Verghese Kurien [C] R.S. Sodhi [D] Sam Pitroda
Ans: Verghese Kurien
Explanation: Verghese Kurien, through Operation Flood, made India self-sufficient in dairy production, earning the title “Father of the White Revolution.”
18. Which private company owned Air India before Nationalization in 1953 ?
[A] Birla Industries [B] Reliance Group [C] Tata Group [D] Adani Group
Ans: Tata Group
Explanation: Tata Group originally owned Air India. In 1953, it was nationalized along with other domestic airlines.
19. Which country is the largest Palm oil exporter to India?
[A] Malaysia [B] Indonesia [C] Vietnam [D] Cambodia
Ans: Indonesia
Explanation: India imports about 71% of its palm oil from Indonesia and 28% from Malaysia.
20. Which among the following crops is surveyed under Project CHAMAN ?
[A] Oil seeds [B] Horticulture [C] Food grains [D] None of the above
Ans: Horticulture
Explanation: CHAMAN (Coordinated Horticulture Assessment and Management using geoinformatics) estimates area and production of horticulture crops using remote sensing and sample surveys.
21. Which is the top coffee producing state in India ?
[A] Kerala [B] Karnataka [C] Tamil Nadu [D] Assam
Ans: Karnataka
Notes: Top 3 coffee-producing states: Karnataka → Tamil Nadu → Kerala.
22. Where is the headquarters of the Tobacco Board of India ?
[A] Guntur [B] Vellore [C] Chennai [D] Kochi
Ans: Guntur
Notes: The Tobacco Board facilitates growers, traders, and exporters. HQ: Guntur, Andhra Pradesh.
23. Which state is the largest producer of poultry meat ?
[A] Punjab [B] Haryana [C] Uttar Pradesh [D] None of the above
Ans: Haryana
Notes: Haryana, West Bengal, and Uttar Pradesh are top producers.
24. Which commodity processing can be considered primary processing ?
[A] Rice [B] Chocolate [C] Bakery [D] None of the above
An: Rice
Notes: Primary processing: rice, sugar, edible oil, flour. Secondary: chocolate, bakery, dairy, fruits/vegetables.
25. What is the base year of IIP when it was first published in 1950 ?
[A] 1939 [B] 1937 [C] 1932 [D] 1940
Ans: 1937
Notes: IIP first published in 1950 by CSO; base year = 1937.
26. Which country is the largest importer of engineering goods from India ?
[A] USA [B] Germany [C] Japan [D] Bangladesh
Ans: USA
Notes: India exports over 60% of engineering goods to US and Europe.
27. What is India’s share in global generic medicines supply ?
[A] 22% [B] 32% [C] 15% [D] 10%
Ans: 22%
Notes: India is the top global supplier of generic medicines (~22% share).
28. Where is the headquarters of Jute Corporation of India located ?
[A] Delhi [B] Mumbai [C] Kolkata [D] Chennai
Ans: Kolkata
Notes: JCI supports jute cultivators with minimum price support; HQ: Kolkata.
29. Where is the Central Silk Board headquarters located ?
[A] Bangalore [B] Chennai [C] Mumbai [D] Ahmedabad
Ans: Bangalore
Notes: Central Silk Board promotes silk industry via research and development; established in 1948.
30. What is the contribution of the retail industry to India’s GDP ?
[A] 13% [B] 10% [C] 21% [D] 15%
Ans: 10%
Notes: The retail sector is growing rapidly, contributing 10% to GDP.
31. What is the per capita steel consumption of India ?
[A] 109 kg [B] 74.1 kg [C] 69 kg [D] 81 kg
Ans: 74.1 kg
Notes: World average = 212 kg; China = 523 kg.
32. What is the main aim of Powertex India ?
[A] Supply power to industries free of cost
[B] Provide incentives to power supply companies
[C] Empower self-help groups in textiles
[D] Financial assistance to economically weaker low-end power loom units
Ans: Financial assistance to economically weaker low-end power loom units
Notes: Powertex India is a scheme by the Ministry of Textiles aimed at providing financial support to economically weaker, low-end power loom units. It helps sustain traditional textile workers, improve productivity, and strengthen the textile value chain.
33. Which is the highest produced silk type in India ?
[A] Eri [B] Mulberry [C] Raw silk [D] Tasar
Ans: Mulberry
Notes: Mulberry = 79.1%, followed by Eri 13.5%, Tasar 5.7%, Raw silk 0.6%. India produces 18% of global silk.
34. In which year was the first AIIMS established in India ?
[A] 1950 [B] 1960 [C] 1956 [D] 1961
Ans: 1956
Notes: AIIMS New Delhi; declared Institute of National Importance.
35. Which is the largest retail chain in India ?
[A] Reliance [B] Pantaloons [C] Big Bazaar [D] Dmart
Ans: Reliance
Notes: Largest in both value and volume.
36. Who holds the CRR deposits of banks ?
[A] RBI [B] Department of Economic Affairs
[C] SBI [D] NABARD
Ans: RBI
Notes: CRR = Cash Reserve Ratio; banks keep reserves with RBI; earns no interest.
37. Which Indian state has the largest solar power capacity ?
[A] Telangana [B] Karnataka [C] Rajasthan [D] Tamil Nadu
Ans: Rajasthan
Notes: Rajasthan ~18.7 GW; followed by Gujarat, Karnataka, Tamil Nadu.
38. Which of the following is not a microeconomic variable ?
[A] Demand of a commodity [B] Supply of a commodity
[C] Price rise of a commodity [D] Employment generated in a year in a country
Ans: Employment generated in a year in a country
Notes: Microeconomics studies individual markets, demand, supply, and prices. Total employment is a macroeconomic variable as it concerns the economy as a whole, not a single market.
39. Which financial institutions are regulated by RBI ?
- Exim Bank
- NABARD
- National Housing Bank
- SIDBI
[A] 1 and 2 [B] 1, 2 and 4 [C] 2, 3 and 4 [D] All of the above
Ans: All of the above
Notes: RBI regulates SIDBI, NABARD, NHB, and Exim Bank.
40. What is the amount of coal produced by India in a year ?
[A] 728 MMT [B] 563 MMT [C] 864 MMT [D] 934 MMT
Ans: 728 MMT
Notes: India = 2nd largest coal producer after China.
41. Where are railway passenger coaches principally manufactured in India ?
[A] Varanasi [B] Haldia [C] Perambur [D] Madurai
Ans: Perambur
Notes: Integral Coach Factory, Chennai (Perambur), established 1952. Oldest & largest in Asia.
42. Which country is the world’s largest LNG exporter ?
[A] USA [B] Qatar [C] Australia [D] Turkmenistan
Ans: Australia
Notes: Australia → top LNG exporter, followed by Qatar.
43. From which country does India import hydropower ?
[A] China [B] Bhutan [C] Bangladesh [D] Sri Lanka
Ans: Bhutan
Notes: India imports excess hydropower from Bhutan.
44. Which department in India is related to registration of patents ?
[A] DPIIT [B] DST [C] Department of Innovation [D] Department of Higher Education
Ans: DPIIT
Notes: DPIIT implements Patents (Amendment) Rules, 2021, encouraging educational institutions.
45. Which country recently announced withdrawal from UN World Tourism Organisation ?
[A] China [B] Russia [C] Ukraine [D] Belarus
Ans: Russia
Notes: Russia withdrew from UNWTO; suspension process still ongoing due to Ukraine conflict.
46. Which of the following is the poverty gap ?
[A] Difference between poverty line & actual income of below-poverty population
[B] Gap between developed & developing nations
[C] Gap between rich & poor
[D] Gap in infrastructural facilities
Ans: Difference between poverty line & actual income of below-poverty population
Notes: The poverty gap measures the intensity of poverty by calculating how far, on average, the incomes of the poor fall below the poverty line. It shows the shortfall of actual income from the minimum required for basic living.
47. Which is known as the soft loan window of World Bank ?
[A] IDA [B] IBRD [C] IFC [D] MIGA
Ans: IDA
Notes: IDA provides soft loans to poorest countries for development & poverty reduction.
48. On what does economic development depend ?
[A] Natural resources [B] Capital formation [C] Size of the market [D] All of the above
Ans: All of the above
Notes: Economic development involves natural resources, capital, infrastructure, human capital, market size, social inclusion, etc.
49. How many sectors are there in the Indian economy on the basis of economic activities ?
[A] 4 [B] 3 [C] 2 [D] 5
Ans: 3
Notes:
- Primary: Agriculture, mining, fishing
- Secondary: Manufacturing, processing
- Tertiary/Service: Banking, retail, restaurants
50. Which of the following is related to labour theory of property ?
[A] Adam Smith [B] John Locke [C] J.S. Mill [D] J.J. Rousseau
Ans: John Locke
Notes: Labour theory: property arises from labour applied to natural resources; basis of homestead principle.