MCQ on Economy and Economics
Q1. Which organization is responsible for estimating the national income of India?
a) Central Statistical Office (CSO)
b) National Sample Survey Office (NSSO)
c) Reserve Bank of India (RBI)
d) Ministry of Finance
Show Answer
Correct Answer: a) Central Statistical Office (CSO)
Explanation: The Central Statistical Office (CSO) is responsible for estimating the national income of India. It is a part of the Ministry of Statistics and Programme Implementation.
Q2. Which sector contributes the most to India’s GDP?
a) Agriculture
b) Industry
c) Services
d) Mining
Show Answer
Correct Answer: c) Services
Explanation: The services sector contributes the most to India’s GDP, accounting for more than 50% of the total GDP.
Q3. Which of the following is not a part of the Indian money market?
a) Commercial Banks
b) Reserve Bank of India
c) Non-Banking Financial Companies
d) Stock Exchange
Show Answer
Correct Answer: d) Stock Exchange
Explanation: The stock exchange is a part of the capital market, not the money market. The money market deals with short-term funds, while the capital market deals with long-term funds.
Q4. Which of the following taxes is levied by the state government in India?
a) Income Tax
b) Corporate Tax
c) Professional Tax
d) Customs Duty
Show Answer
Correct Answer: c) Professional Tax
Explanation: Professional Tax is a tax levied on the income earned by salaried employees and professionals, including chartered accountants, doctors, and lawyers, etc., to the state government.
Q5. Which of the following is a measure of inflation in India?
a) Consumer Price Index (CPI)
b) Wholesale Price Index (WPI)
c) Both (a) and (b)
d) None of the above
Show Answer
Correct Answer: c) Both (a) and (b)
Explanation: Both the Consumer Price Index (CPI) and the Wholesale Price Index (WPI) are measures of inflation in India. CPI measures the change in the prices of a basket of consumer goods and services, while WPI measures the change in the prices of a basket of wholesale goods.
Q6. Which of the following is the apex institution in the field of rural credit in India?
a) National Bank for Agriculture and Rural Development (NABARD)
b) Reserve Bank of India (RBI)
c) Small Industries Development Bank of India (SIDBI)
d) State Bank of India (SBI)
Show Answer
Correct Answer: a) National Bank for Agriculture and Rural Development (NABARD)
Explanation: NABARD is the apex institution in the field of rural credit in India. It was established in 1982 to provide credit and other facilities for the promotion and development of agriculture, small-scale industries, and other rural sectors.
Q7. Which of the following is the main objective of the Minimum Support Price (MSP) in India?
a) To ensure remunerative prices to the farmers
b) To control inflation
c) To promote exports
d) To reduce fiscal deficit
Show Answer
Correct Answer: a) To ensure remunerative prices to the farmers
Explanation: The main objective of the Minimum Support Price (MSP) in India is to ensure remunerative prices to the farmers for their produce, thereby providing them with a stable income and encouraging them to invest in modern agricultural practices.
Q8. Which of the following is not a function of the Reserve Bank of India (RBI)?
a) Issuing currency notes
b) Formulating monetary policy
c) Regulating the stock market
d) Acting as a banker to the government
Show Answer
Correct Answer: c) Regulating the stock market
Explanation: The Reserve Bank of India (RBI) does not regulate the stock market. The Securities and Exchange Board of India (SEBI) is the regulatory authority for the securities market in India.
Q9. Which of the following is the largest source of revenue for the central government in India?
a) Corporation Tax
b) Income Tax
c) Goods and Services Tax (GST)
d) Customs Duty
Show Answer
Correct Answer: c) Goods and Services Tax (GST)
Explanation: Goods and Services Tax (GST) is the largest source of revenue for the central government in India. It is an indirect tax levied on the supply of goods and services and has replaced several indirect taxes in India.
Q10. Which of the following is the main instrument of fiscal policy in India?
a) Repo Rate
b) Cash Reserve Ratio (CRR)
c) Government Budget
d) Open Market Operations
Show Answer
Correct Answer: c) Government Budget
Explanation: The government budget is the main instrument of fiscal policy in India. It is a statement of the government’s estimated receipts and expenditures for a financial year and is used to manage public finances, promote economic growth, and ensure social justice.
Q11. Which of the following is not a part of India’s external debt?
a) Multilateral debt
b) Bilateral debt
c) Commercial borrowings
d) Provident Fund
Show Answer
Correct Answer: d) Provident Fund
Explanation: Provident Fund is a part of India’s internal debt, not external debt. External debt includes multilateral debt, bilateral debt, and commercial borrowings.
Q12. Which of the following is the main cause of the balance of payments crisis in India?
a) High fiscal deficit
b) High current account deficit
c) High inflation
d) High external debt
Show Answer
Correct Answer: b) High current account deficit
Explanation: A high current account deficit is the main cause of the balance of payments crisis in India. It occurs when the value of imports of goods, services, and investment income exceeds the value of exports.
Q13. Which of the following is not a component of India’s foreign exchange reserves?
a) Foreign currency assets
b) Gold
c) Special Drawing Rights (SDRs)
d) Foreign Direct Investment (FDI)
Show Answer
Correct Answer: d) Foreign Direct Investment (FDI)
Explanation: Foreign Direct Investment (FDI) is not a component of India’s foreign exchange reserves. The foreign exchange reserves consist of foreign currency assets, gold, and Special Drawing Rights (SDRs).
Q14. Which of the following is the main objective of the Pradhan Mantri Jan Dhan Yojana (PMJDY)?
a) Financial inclusion
b) Skill development
c) Employment generation
d) Infrastructure development
Show Answer
Correct Answer: a) Financial inclusion
Explanation: The main objective of the Pradhan Mantri Jan Dhan Yojana (PMJDY) is to ensure financial inclusion by providing universal access to banking facilities, including basic savings bank accounts, remittance and credit, insurance, and pension services.
Q15. Which of the following is not a function of the Securities and Exchange Board of India (SEBI)?
a) Regulating the securities market
b) Protecting the interests of investors
c) Promoting the development of the securities market
d) Regulating the foreign exchange market
Show Answer
Correct Answer: d) Regulating the foreign exchange market
Explanation: The Securities and Exchange Board of India (SEBI) is not responsible for regulating the foreign exchange market. SEBI’s primary functions include regulating the securities market, protecting the interests of investors, and promoting the development of the securities market. The foreign exchange market is regulated by the Reserve Bank of India (RBI).
Q16. Which of the following is the main objective of the Make in India initiative?
a) Promoting foreign investment
b) Boosting domestic manufacturing
c) Encouraging exports
d) All of the above
Show Answer
Correct Answer: d) All of the above
Explanation: The main objective of the Make in India initiative is to promote foreign investment, boost domestic manufacturing, and encourage exports. Launched in 2014, the initiative aims to make India a global manufacturing hub by attracting investments from multinational companies and fostering innovation.
Q17. Which of the following is the main objective of the Goods and Services Tax (GST) in India?
a) Reducing the fiscal deficit
b) Simplifying the tax structure
c) Promoting exports
d) Controlling inflation
Show Answer
Correct Answer: b) Simplifying the tax structure
Explanation: The main objective of the Goods and Services Tax (GST) in India is to simplify the tax structure by replacing multiple indirect taxes with a single, unified tax system. GST is levied on the supply of goods and services and aims to create a seamless national market, improve tax compliance, and reduce the cascading effect of taxes.
Q18. Which of the following is the main objective of the Insolvency and Bankruptcy Code (IBC) in India?
a) Promoting financial inclusion
b) Resolving insolvency and bankruptcy cases
c) Encouraging foreign investment
d) Reducing non-performing assets (NPAs)
Show Answer
Correct Answer: b) Resolving insolvency and bankruptcy cases
Explanation: The main objective of the Insolvency and Bankruptcy Code (IBC) in India is to resolve insolvency and bankruptcy cases in a time-bound manner. The IBC provides a framework for the resolution of corporate and individual insolvency, aiming to maximize the value of assets, promote entrepreneurship, and improve the ease of doing business.
Q19. Which of the following is the main objective of the Monetary Policy Committee (MPC) in India?
a) Controlling inflation
b) Promoting economic growth
c) Ensuring financial stability
d) All of the above
Show Answer
Correct Answer: a) Controlling inflation
Explanation: The main objective of the Monetary Policy Committee (MPC) in India is to control inflation. The MPC is responsible for setting the policy interest rate (repo rate) to achieve the inflation target set by the government. The MPC also considers factors such as economic growth and financial stability while formulating monetary policy.
Q20. Which of the following is the main objective of the Fiscal Responsibility and Budget Management (FRBM) Act in India?
a) Reducing the fiscal deficit
b) Ensuring inter-generational equity
c) Promoting fiscal transparency
d) All of the above
Show Answer
Correct Answer: d) All of the above
Explanation: The main objective of the Fiscal Responsibility and Budget Management (FRBM) Act in India is to reduce the fiscal deficit, ensure inter-generational equity, and promote fiscal transparency. The Act sets targets for the government’s fiscal deficit, revenue deficit, and debt levels, aiming to ensure fiscal discipline and macroeconomic stability.