MCQ on Characteristics of Indian Economy
Q1. Which of the following best describes the Indian economy?
a) Capitalist economy
b) Socialist economy
c) Mixed economy
d) Command economy
Show Answer
Correct Answer: c) Mixed economy
Explanation: The Indian economy is best described as a mixed economy, which combines elements of both capitalist and socialist economic systems. It features a blend of public and private ownership, with the government playing a significant role in regulating and controlling various sectors.
Q2. Which of the following is a characteristic of the Indian economy?
a) High degree of self-sufficiency
b) High dependence on agriculture
c) High degree of industrialization
d) High degree of urbanization
Show Answer
Correct Answer: b) High dependence on agriculture
Explanation: A significant characteristic of the Indian economy is its high dependence on agriculture. Despite the growth of the industrial and services sectors, agriculture remains a crucial sector, providing livelihood to a large portion of the population and contributing to food security.
Q3. Which of the following is a major challenge faced by the Indian economy?
a) Low population growth
b) High unemployment rate
c) Low inflation rate
d) Low external debt
Show Answer
Correct Answer: b) High unemployment rate
Explanation: A major challenge faced by the Indian economy is the high unemployment rate. Despite economic growth, the country struggles to generate enough jobs for its large and growing population, leading to underemployment and disguised unemployment.
Q4. Which of the following is a characteristic of the Indian labor force?
a) High degree of skilled labor
b) High degree of unskilled labor
c) High degree of organized labor
d) High degree of unionization
Show Answer
Correct Answer: b) High degree of unskilled labor
Explanation: A characteristic of the Indian labor force is the high degree of unskilled labor. A significant portion of the workforce is engaged in low-productivity jobs, often in the informal sector, with limited access to education and skill development opportunities.
Q5. Which of the following is a major source of revenue for the Indian government?
a) Direct taxes
b) Indirect taxes
c) Non-tax revenue
d) External borrowing
Show Answer
Correct Answer: b) Indirect taxes
Explanation: Indirect taxes, such as the Goods and Services Tax (GST), are a major source of revenue for the Indian government. These taxes are levied on the production and consumption of goods and services, and their burden is ultimately borne by the end consumer.
Q6. Which of the following is a major component of India’s GDP?
a) Agriculture
b) Industry
c) Services
d) Mining
Show Answer
Correct Answer: c) Services
Explanation: The services sector is a major component of India’s GDP, accounting for more than half of the country’s total output. This sector includes various sub-sectors such as IT, tourism, healthcare, and financial services, among others.
Q7. Which of the following is a major challenge faced by the Indian agriculture sector?
a) Low productivity
b) High mechanization
c) High commercialization
d) High export orientation
Show Answer
Correct Answer: a) Low productivity
Explanation: A major challenge faced by the Indian agriculture sector is low productivity. Factors such as small and fragmented landholdings, inadequate irrigation facilities, and limited access to modern technology and inputs contribute to low agricultural productivity.
Q8. Which of the following is a characteristic of the Indian industrial sector?
a) High degree of capital intensity
b) High degree of labor intensity
c) High degree of export orientation
d) High degree of import substitution
Show Answer
Correct Answer: b) High degree of labor intensity
Explanation: A characteristic of the Indian industrial sector is its high degree of labor intensity. Many industries in India rely heavily on manual labor, often due to the availability of cheap labor and the lack of capital investment in modern technology and machinery.
Q9. Which of the following is a major challenge faced by the Indian services sector?
a) Low growth rate
b) Low employment generation
c) Low export orientation
d) Low skill development
Show Answer
Correct Answer: d) Low skill development
Explanation: A major challenge faced by the Indian services sector is low skill development. Despite the growth of the sector, there is a shortage of skilled professionals, particularly in areas such as IT, healthcare, and finance, which hampers the sector’s potential for further growth and employment generation.
Q10. Which of the following is a major source of foreign exchange earnings for India?
a) Agricultural exports
b) Industrial exports
c) Services exports
d) Remittances
Show Answer
Correct Answer: d) Remittances
Explanation: Remittances are a major source of foreign exchange earnings for India. A significant portion of the Indian population works abroad, particularly in the Gulf countries, and sends money back home, contributing to the country’s foreign exchange reserves.
Q11. Which of the following is a major challenge faced by the Indian economy in terms of infrastructure?
a) High investment in infrastructure
b) High quality of infrastructure
c) Inadequate infrastructure
d) High reliance on public-private partnerships
Show Answer
Correct Answer: c) Inadequate infrastructure
Explanation: A major challenge faced by the Indian economy in terms of infrastructure is its inadequacy. Factors such as insufficient power supply, poor transportation networks, and limited access to clean water and sanitation facilities hinder economic growth and development.
Q12. Which of the following is a major challenge faced by the Indian economy in terms of human development?
a) High literacy rate
b) High life expectancy
c) High poverty rate
d) High urbanization rate
Show Answer
Correct Answer: c) High poverty rate
Explanation: A major challenge faced by the Indian economy in terms of human development is the high poverty rate. Despite economic growth, a significant portion of the population continues to live below the poverty line, with limited access to basic amenities such as food, healthcare, and education.
Q13. Which of the following is a major challenge faced by the Indian economy in terms of fiscal management?
a) Low fiscal deficit
b) High revenue deficit
c) Low public debt
d) High tax compliance
Show Answer
Correct Answer: b) High revenue deficit
Explanation: A major challenge faced by the Indian economy in terms of fiscal management is the high revenue deficit. The government’s revenue receipts are often insufficient to cover its current expenditures, leading to a revenue deficit and the need for additional borrowing.
Q14. Which of the following is a major challenge faced by the Indian economy in terms of monetary management?
a) Low inflation rate
b) High interest rates
c) Low money supply
d) High exchange rate volatility
Show Answer
Correct Answer: d) High exchange rate volatility
Explanation: A major challenge faced by the Indian economy in terms of monetary management is high exchange rate volatility. Factors such as global economic uncertainties, fluctuations in capital flows, and changes in monetary policy can lead to significant fluctuations in the exchange rate, affecting trade and investment.
Q15. Which of the following is a major challenge faced by the Indian economy in terms of external sector management?
a) Low current account deficit
b) High current account deficit
c) Volatility in capital flows
d) Dependence on foreign oil
Show Answer
Correct Answer: a) Low current account deficit
Explanation: A major challenge faced by the Indian economy in terms of external sector management is the low current account deficit. The current account deficit occurs when the value of imports of goods, services, and investment income exceeds the value of exports. A high current account deficit can put pressure on the country’s foreign exchange reserves and affect its macroeconomic stability.
Q16. Which of the following is a characteristic of the Indian economy in terms of income distribution?
a) High income inequality
b) Low income inequality
c) High income mobility
d) Low income mobility
Show Answer
Correct Answer: a) High income inequality
Explanation: A characteristic of the Indian economy in terms of income distribution is high income inequality. Despite economic growth, there is a significant disparity in income levels between different sections of the population, with the rich getting richer and the poor remaining poor.
Q17. Which of the following is a major challenge faced by the Indian economy in terms of regional development?
a) Balanced regional development
b) High concentration of industries in a few regions
c) Low concentration of industries in a few regions
d) High inter-state migration
Show Answer
Correct Answer: b) High concentration of industries in a few regions
Explanation: A major challenge faced by the Indian economy in terms of regional development is the high concentration of industries in a few regions. This leads to an uneven distribution of economic activities and resources, resulting in regional disparities in terms of income, employment, and infrastructure.
Q18. Which of the following is a major challenge faced by the Indian economy in terms of environmental sustainability?
a) Low pollution levels
b) High pollution levels
c) Low deforestation rate
d) High afforestation rate
Show Answer
Correct Answer: b) High pollution levels
Explanation: A major challenge faced by the Indian economy in terms of environmental sustainability is high pollution levels. Rapid industrialization, urbanization, and population growth have led to increased pollution levels, affecting air, water, and soil quality, and posing a threat to public health and the environment.
Q19. Which of the following is a major challenge faced by the Indian economy in terms of demographic dividend?
a) Low population growth
b) High population growth
c) Low dependency ratio
d) High dependency ratio
Show Answer
Correct Answer: d) High dependency ratio
Explanation: A major challenge faced by the Indian economy in terms of demographic dividend is the high dependency ratio. The dependency ratio is the ratio of the non-working-age population (children and elderly) to the working-age population. A high dependency ratio puts pressure on the working-age population to support the non-working-age population, affecting savings, investment, and economic growth.
Q20. Which of the following is a major challenge faced by the Indian economy in terms of gender development?
a) High female labor force participation
b) Low female labor force participation
c) High gender wage gap
d) Low gender wage gap
Show Answer
Correct Answer: b) Low female labor force participation
Explanation: A major challenge faced by the Indian economy in terms of gender development is the low female labor force participation. Despite improvements in female literacy and education levels, the participation of women in the labor force remains low, affecting their economic empowerment and overall development.