Indian Economy Multiple Choice Questions For Competitive Examinations

Indian Economy Multiple Choice Questions (MCQs) for State and UPSC Civil Services Examinations. Objective Questions on Indian Economy for competitive examinations.

Recently, the Cabinet has approved the merger of 5 associate banks of SBI with the parent bank SBI. What will be the approximate market share of the banking giant produced via this merger?

[A] 10%

[B] 15%

[C] 20%

[D] 25%

Correct Answer: D [ 25% ]

Notes:

Union Cabinet has approved the proposal for merger of State Bank of Bikaner & Jaipur (SBBJ), State Bank of Patiala (SBP), State Bank of Mysore (SBM), State Bank of Travancore (SBT), and State Bank of Hyderabad (SBH) with the parent, State Bank of India. This merger will create a banking giant, having 1/4 of market share in India’s banking sector (in terms of loans and deposits), with an asset base of about Rs 40 lakh crore from Rs 23 lakh crore.

The rate at which RBI purchases or rediscounts bills of exchange of commercial banks is called?

[A] Repo rate

[B] Reverse repo rate

[C] Bank rate

[D] Base rate

Correct Answer: C [Bank rate]

Notes:

Bank Rate refers to the official interest rate at which RBI will provide loans to the banking system which includes commercial / cooperative banks, development banks etc. Such loans are given out either by direct lending or by rediscounting (buying back) the bills of commercial banks and treasury bills. Thus, the bank rate is also known as the discount rate. Bank rate is used as a signal by the RBI to the commercial banks on RBI’s thinking of what the interest rates should be.

Bank Rate and Repo Rate seem to be similar terms because in both of them RBI lends to the banks. However, Repo Rate is a short-term measure and it refers to short-term loans used for controlling the amount of money in the market. On the other hand, Bank Rate is a long-term measure and is governed by the long-term monetary policies of the RBI. In broader terms, bank rate is the rate of interest which a central bank charges on the loans and advances that it extends to commercial banks and other financial intermediaries. RBI uses this tool to control the money supply.

Which among the following organizations calculate and publish LIBOR (London Interbank Offered Rate)?

[A] Bank of England

[B] Thomson Reuters

[C] European Banking Federation

[D] European Central Bank

Correct Answer: B [Thomson Reuters]

Notes:

The London Interbank Offered Rate (LIBOR) is the average interest-rate calculated from estimates submitted by the leading banks in London. The rates are calculated and published by Thomson Reuters Corporation.

Hang-Seng is the share market index at which of the following?

[A] Shanghai

[B] Hong Kong

[C] Seoul

[D] Tokyo

Correct Answer; [B] Hong Kong

NOTES;

The Hang Seng Index (abbreviated: HSI, traditional Chinese:) is a free float-adjusted market capitalization-weighted stock market index in Hong Kong.

Rs. 100 notes are printed in which of the following?

[A] The Indian Security Press Nasik

[B] The Security Printing Press Hyderabad

[C] The bank Note Press, Dewas

[D] All1,2&3

Correct Answer: D [All1,2&3]

Notes:

The currency notes in India are printed in 4 presses. Two of them are owned by the Government of India and are located at Nashik and Devas. Two others are owned by the Reserve Bank of India at Mysore and Salboni.

The concept of weaker sections under ‘priority sector’ was introduced on the recommendation of which of the following committees?

[A] Krishnaswami Committee

[B] Varshney Committee

[C] Gadgil Committee

[D] Abid Hussain Committee

Correct Answer: A [Krishnaswami Committee]

Notes:

The term Priority Sector Lending was defined in the year 1972 by Krishnaswamy Committee. Initially banks were given a Priority sector lending target of 33.33%. But following the Krishnaswami Committee’s recommendations, the targets were raised to 40%.

When a person has a savings account in the bank , the bank assumes the position of ___?

[A] Debtor

[B] Creditor

[C] Agency

[D] Depositor

Correct Answer: A [Debtor]

Notes:

please note bank functions as an agent or agency when it buys or sells securities on behalf of the customer or collects and makes payment on behalf of the customer

An investor or speculator who subscribes to a new issue with the intention of selling them soon after allotment to realize a quick profit is called?

[A] Stag

[B] Tall

[C] Bull

[D] Bear

Correct Answer: A [Stag]

Notes:

The term stag means a speculator who buys and sells stocks in short timeframes to make quick profits. The motive of stag is to make profit quickly on a fast moving trend, rather than buying and holding for the long run.

What does the FDI trigger list consist of _______?

[A] List of country-specific FDI restrictions

[B] List of all FDI proposals

[C] Permissions required to make FDI in India

[D] investors with suspected illegal sources of funds or linkages, sensitive areas (like aviation, telecommunications etc) and sensitive locations (like Jammu & Kashmir) for special scrutiny.

Correct Answer: D [investors with suspected illegal sources of funds or linkages, sensitive areas (like aviation, telecommunications etc) and sensitive locations (like Jammu & Kashmir) for special scrutiny.]

Which of the following companies introduced for the first time Traveller Cheques in the form of ‘circular notes’? 

[A] Cox & King

[B] Thomas Cook

[C] American Express

[D] HSBC Bank USA

Correct Answer: B [Thomas Cook ]

NOTES 

1865 – Thomas Cook opens his first high-street shop in Fleet Street, London. 1874 – Thomas Cook launches Cook’s Circular Note a precursor of the travelers cheque, in New York.

From the following, bring out the one which is not a liability of a commercial bank?

[A] Time Deposits

[B] Borrowing from saving banks

[C] Security Holdings

[D] Demand deposits

Correct Answer: C [Security Holdings]

NOTES :- T-bills will not be a liability for a bank as banks use their money to buy government treasury bills.

Who among the following are the beneficiaries of Ways and Means Advances (WMA) facility of Reserve Bank of India?

[A] Commercial Banks

[B] Regional Rural banks

[C] State Governments

[D] Authorized Dealers of Foreign Exchanges

Correct Answer: C [State Governments]

NOTES :- Simply put, it is a facility for both the Centre and states to borrow from the RBI. These borrowings are meant purely to help them to tide over 

Hundies are normally __________?

[A] Cheque

[B] Bills of Exchanges

[C] Bills of Purchase

[D] Bills of Lading

Correct Answer: B [Bills of Exchanges]

A monopolist will be able to maximize his profits when _________?

[A] His output is maximum

[B] He charges a Higher price

[C] His average cost is minimum

[D] His marginal cost is equal to the marginal revenue

Correct Answer: D [His marginal cost is equal to the marginal revenue]

Notes:

A monopolist is able to maximize his profits when his marginal cost is equal to marginal revenue. The profit-maximizing choice for the monopoly will be to produce at the quantity where marginal revenue is equal to marginal cost: that is, MR = MC.

What is the frequency of availability of Overall WPI Index?

[A] Weekly

[B] Biweekly

[C] Monthly

[D] Daily

Correct Answer: C [Monthly]

What was the name of the world currency that John Maynard Keynes conceptualized in the years 1940-42 and proposed at the Bretton Woods Conference?

[A] Whuffie

[B] Bancor

[C] Wocu

[D] Terra

Correct Answer: B [Bancor]

NOTES

The bancor was a supranational currency that John Maynard Keynes and E. F. Schumacher conceptualised in the years 1940–1942 and which the United Kingdom proposed to introduce after World War II. The name was inspired by the French banque or (‘bank gold’). 

Consider the following: 

  1. Rice
  2. Wheat 
  3. Coarse cereals 
  4. Pulses 

Which among the following correctly represents Total Food Grains?

[A] 1 +2

[B] 1 + 2 + 3

[C] 1+2+4

[D] 1+2+3+4

Correct Answer: D [1+2+3+4]

Consider the following statements

  1. Most oil & gas exporting countries are using the US dollar for their transaction
  2. Most oil & gas exporting countries are using Asian Clearing Union Mechanism for settlement
  3. Which among the above statements is / are correct?

[A] Only 1 is correct

[B] Only 2 is correct

[C] Both 1 & 2 are correct

[D] Neither 1 nor 2 is correct

Correct Answer: A [Only 1 is correct]

How many states of India are covered under the National Horticulture Mission?

[A] 14

[B] 16

[C] 18

[D] 20

Correct Answer: C [18]

NOTES :- A total of three hundred and eighty four (384) districts under National Horticulture Mission (NHM) are covered in 23 States/UTs

Real National income increases in which of the following circumstances?

[A] When Prices of goods increases

[B] When saving of people increases

[C] When Inflation increases prices and taxes

[D] When the production of goods and services increases

Correct Answer: D [When the production of goods and services increases]

Notes:

As the calculation of national income is the total value of all goods and services in an economy the real increase happens when the output production increases. The rate change won’t affect because while calculating real national income we take into account the prices of base year. So even the inflation effect is also removed.

Who is the author of “Volatility and Growth”?

[A] Esther Duflo

[B] Amartya Sen

[C] Abhijit Banerjee

[D] Jagadish Bhagwati

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.

In which type of economy, competition doesn’t exist in the market?

[A] Mixed economy

[B] Capitalist economy

[C] Market economy

[D] Socialist economy

Correct Answer: D [Socialist economy]

Notes:

In the socialist form of economy where the control of the state is in excess, the competition doesn’t exist. The market forces don’t play any role. It is the state which makes all the decisions.

Which sector do the red collar workers belong to?

[A] Primary sector

[B] Secondary sector

[C] Tertiary sector

[D] None of the above

Correct Answer: A [Primary sector]

Notes:

The people involved in the

Primary sector – red collar,

Secondary sector – blue-collar and

Tertiary sector –  white collar.

Which sector employs the maximum population in the country?

[A] Primary sector

[B] Secondary sector

[C] Tertiary sector

[D] Unorganized sector

Correct Answer: A [Primary sector]

Notes:

Agriculture is the primary source of livelihood for about 58% of India’s population. It contributed about 17% to India’s GDP

What was the Indian economy share in the world economy immediately after Independence?

[A] 2.3%

[B] 3.2%

[C] 3.3%

[D] 3.8%

Correct Answer: D [3.8%]

Notes:

India’s economy had a 3.8% share of world income in 1952 after Independence from the British empire.  Currently, India’s share in the world economy is 7.5% of world GDP.

Which of the following is a reason for India to be a developing country?

[A] Most people depend on agriculture

[B] No rapid Industrialization

[C] Scarce Capital

[D] Low per capita income

Correct Answer: D [Low per capita income]

Notes:

India is an agricultural country that is seeking to become more advanced economically and socially. India has achieved much in the last decades. But the per capita income growth rate is slow in our country as compared to developed countries, hence it is defined as a developing country.

In which year, the Planning commission scrapped?

[A] 2017

[B] 2005

[C] 2014

[D] 2015

Correct Answer: C [2014]

Notes:

The planning commission was scrapped in 2014 and NITI Aayog was created.

what does food security mean?

1. Accessibility of food

2. Availability of food

3. Affordability of food

Choose the correct option from the codes given below:

[A] 1 only

[B] 2 only

[C] 3 only

[D] 1,2 and 3 only

Correct Answer: D [1,2 and 3 only]

Notes:

Food security is providing food to all people at all times. It deals with Accessibility of food, Availability of food and Affordability of food.

What is the percentage of gross cropped area of oilseeds in the country?

[A] 19%

[B] 13%

[C] 10%

[D] 20%

Correct Answer: B [13%]

Notes:

The gross cropped area of oilseeds is 13% among the total cropped area. it contributed 3% to GDP.

FOR MORE ECONOMY QUESTIONS AND ANSWER

1.Recently, the Cabinet has approved the merger of 5 associate banks of SBI with the parent bank SBI. What will be the approximate market share of the banking giant produced via this merger?

2.The rate at which RBI purchases or rediscounts bills of exchange of commercial banks is called?

3.Which among the following organizations calculate and publish LIBOR (London Interbank Offered Rate)?

4.Hang-Seng is the share market index at which of the following?

5.Rs. 100 notes are printed in which of the following?

6.The concept of weaker sections under ‘priority sector’ was introduced on the recommendation of which of the following committees?

7.When a person has a savings account in the bank , the bank assumes the position of ___?

8.An investor or speculator who subscribes to a new issue with the intention of selling them soon after allotment to realize a quick profit is called?

9. What does the FDI trigger list consist of _______?

10. Which of the following companies introduced for the first time Traveller Cheques in the form of ‘circular notes’? 

11.From the following, bring out the one which is not a liability of a commercial bank?

12.Who among the following are the beneficiaries of Ways and Means Advances (WMA) facility of Reserve Bank of India?

13.Hundies are normally __________?

14.A monopolist will be able to maximize his profits when _________?

15.What is the frequency of availability of Overall WPI Index?

16.What was the name of the world currency that John Maynard Keynes conceptualized in the years 1940-42 and proposed at the Bretton Woods Conference?

17.Consider the following: 

18. Which among the following correctly represents Total Food Grains?

19.Consider the following statements

20.How many states of India are covered under the National Horticulture Mission?

21.Real National income increases in which of the following circumstances?

22.Who is the author of “Volatility and Growth”?

23.In which type of economy, competition doesn’t exist in the market?

24.Which sector do the red collar workers belong to?

25.Which sector employs the maximum population in the country?

26.What was the Indian economy share in the world economy immediately after Independence?

27.Which of the following is a reason for India to be a developing country?

28.In which year, the Planning commission scrapped?

29.what does food security mean?

30.What is the percentage of gross cropped area of oilseeds in the country?

MORE QUESTIONS ABOUT INDIAN ECONOMY 

1.The base year for the calculation of all-India Index of Industrial Production (IIP) is:

2.Which of the following is not a correct statement with respect to Masala Bonds? 

3.Which among the following is an opposite activity of hedging in share / currency /future markets?

4.In which of the following countries first Stock Exchange opened?

5.Which among the following represents the accounting year of the Reserve Bank of India?

6.The portion of profits that a company distributes among its shareholders in the form of cash is usually known as _____?

7.Under which of the following laws, the Subsidiary Bank of the State Bank of India is constituted ?

8.IFSC is an alphanumeric code designed to uniquely identify the bank branches in India. This is an 11-digit code with the first four characters representing the bank’s code, the next character reserved as control character (currently, 0 appears in the fifth position) and remaining six characters to identify the branch. RBI has advised all banks to print IFSC on cheque leaves issued to customers. What is the full form for IFSC Code?

9.A monopolist will be able to maximize his profits when _________?

10.Which among the following banks was designated as the Agency for operationalisation of the Joint Investment Fund between India and Oman?

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