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50 Objective Questions and Answers on Indian Economics.

Questions related to Indian Economics are asked in various competitive examinations conducted by SSC, UPSC, PSC, LIC, GIC, Railways, IBPS, etc. The main objective of these questions is to test the candidate's knowledge in the subject - Economics.


Candidates who want to test their preparation in the topic - Indian Economics, we have provided below 50 Important Objective Questions and Answers on Indian Economics. These questions on economics have already been asked in various competitive examinations.


Model Test Paper-1


1) In which year Reserve Bank of India was nationalised?
A) 1935
B) 1942
C) 1949
D) 1952

2) The observation that 'Supply creates its own demand' is popularly called?
A) Say's Law
B) Greham's Law
C) Murphy's Law
D) Newton's Law

3) What was the main objective of Green Revolution in India ?
A) To increase the extent of cash crop cultivation
B) To increase the area of green forests under social forestry scheme
C) Modernisation of agriculture through science and technology
D) To introduce the Japanese method of paddy cultivation

4) ____ is the ex-officio chairman of Planning Commission and National Development Council.
A) Prime Minister
B) President
C) Finance Minister
D) Commerce Minister

5) 70% of working population of India is engaged in:
A) public sector
B) primary sector
C) secondary sector
D) tertiary sector

6) A closed economy is an economy in which:
A) the money supply is fully controlled
B) deficit financing takes place
C) only exports take place
D) neither exports nor imports take place

7) A good method of providing employment to rural labor and utilizing it fully is through?
A) Rural industries
B) Agriculture
C) Public works programmes
D) Cattle rearing

8) A hammer in the hands of a housewife is a _________ good.
A) capital
B) free
C) intermediary
D) consumer

9) A high rate of inflation tends to worsen balance of payments because:
A) prices of imported goods rise
B) prices of exported goods rise making exports less competitive
C) prices of imported goods fall and hence more is imported
D) prices of exported goods fall and hence less amount is obtained in terms of foreign exchange

10) A non-performing asset is
A) Money at call and short notice
B) Cash balance with the bank
C) Cash balance with the RBI
D) An asset that ceases to generate income

11) A rolling plan was a plan for:
A) one year
B) three years
C) five years
D) four years

12) A Scheduled Bank is one which is included in the:
A) II Schedule of Banking Regulation Act
B) II Schedule of Constitution
C) II Schedule of Reserve Bank of India Act
D) None of these

13) A steady increase in the general level of prices as a result of excessive increase in aggregate demand as compared to aggregate supply is termed as :
A) demand-pull inflation
B) cost-push inflation
C) stagflation
D) structural inflation

14) A very rapid growth in prices in which money loses its value to the point where even barter may be preferable is known as:
A) inflation
B) hyper-inflation
C) deflation
D) disinflation

15) Absolute Poverty means:
A) poverty in terms of absolute number of people
B) poverty in terms of the basic minimum calorie requirements
C) poverty in terms of the prevailing price level
D) poverty in terms of the absolute level of unemployment

16) According to the law of demand, when Price?
A) Decreases, demand decreases
B) Decreases, demand does not change
C) Increases, demand decreases
D) Increases, demand increases

17) Among the reasons for disguised unemployment in the rural areas is :
A) choice of a heavy industry model for economic development
B) low levels of technological development in the country
C) heavy pressure of population along with slow implementation of land reforms
D) high illiteracy rate

18) Among the remedies of inflation we cannot include:
A) better capacity utilisation
B) lowering bank rate
C) reducing budgetary deficit
D) an efficient public distribution system

19) Amongst the currency quotes USD/JPY, USD/Euro and USD/CAD, which one of the following is referred as the base currency for quotes?
A) US $
B) JPY
C) Euro
D) CAD

20) An ad valorem duty is a tax on the basis of?
A) The unit of the commodity
B) The advertisement expenditure
C) The price of a commodity
D) None of these

21) An economy is in equilibrium when
A) Planned consumption exceeds planned saving
B) Planned consumption exceeds planned investment
C) Intended investment equals intended saving
D) Intended investment exceeds intended saving

22) An essential attribute of inflation is:
A) fall in production
B) increase in prices
C) absence of black market
D) presence of black market

23) An increase in the quantity supplied suggests?
A) a rightward shift of the supply curve
B) a leftward shift of the supply curve
C) a movement up along the supply curve
D) a movement down the supply curve

24) As on 2013, Foreign Direct Investment(FDI) ceilings in the telecom sector is?
A) 49 percent
B) 50 percent
C) 75 percent
D) 100 percent

25) Bank rate is the rate at which:
A) a bank lends to the public
B) the Reserve Bank of India lends to the public
C) the Government of India lends to other countries
D) the Reserve Bank of India gives credit to commercial banks

26) Banks in India are required to maintain a portion of their demand and time liabilities with the Reserve Bank of India. This portion is called
A) Statutory Liquidity Ratio
B) Reverse Repo
C) Bank Deposit
D) Cash Reserve Ratio

27) Black money is :
A) counterfeit currency
B) illegally earned money
C) money earned through underhand deals
D) income on which payment of tax is usually evaded

28) Broad money in India is :
A) M1
B) M2
C) M3
D) M4

29) Capital output ratio of a commodity measures
A) Its per unit cost of production
B) The amount of capital invested per unit of output
C) The ratio of capital depreciation to quantity of output
D) The ratio of working capital employed to quantity of output

30) Consequent upon the recommendations of the Working Group on Rural Banks, 5 Rural Regional Banks were initially set up in the year:
A) 1973
B) 1974
C) 1975
D) 1976

31) Consumer's surplus is the highest in the case of ?
A) necessities
B) comforts
C) luxuries
D) durable goods

32) Convertibility of the rupee implies:
A) being able to convert rupee notes into gold
B) freely permitting the conversion of rupee to other major currencies and vice versa
C) allowing the value of the rupee to be fixed by market forces
D) developing an international market for currencies in India

33) Cyclical unemployment refers to:
A) seasonal unemployment
B) disguised unemployment
C) voluntary unemployment
D) unemployment during recessionary phase of a trade cycle

34) Dadabhai Naoroji theorised on the drain of wealth from India in his book:
A) Poverty under British Rule in India
B) Poverty in British Rule in India
C) Poverty and Un-British Rule in India
D) Poverty of Economic Drain in British India

35) To prevent recurrence of scams in Indian Capital Market, the Government has assigned regulatory powers to:
A) RBI
B) SBI
C) SEBI
D) ICICI

36) Debenture holders of a company are its?
A) Creditors
B) Debtors
C) Shareholders
D) Directors

37) Deficit financing creates additional paper currency to fill the gap between expenditure and revenue. This device aims at economic development but if it fails, it generates :
A) inflation
B) devaluation
C) deflation
D) demonetization

38) Deficit financing implies?
A) Public expenditure in excess of public revenue
B) Replacing new currency with worn out currency
C) Public revenue in excess of public expenditure
D) Printing new currency notes

39) Deficit financing leads to inflation in general, but it can be checked if?
A) Only aggregate demand is increased
B) Government expenditure leads to increase in the aggregate supply in ratio of aggregate demand
C) All the expenditure is denoted national debt payment only
D) All of these

40) Deficit Financing means that the government borrows money from the?
A) Reserve Bank of India
B) Asian Development Bank
C) World Bank
D) International Monetary Fund

41) Demand in Economics means
A) Market demand
B) Individual demand
C) Demand backed by purchasing power
D) Aggregate demand

42) Depreciation means?
A) Closure of a plant due to labour trouble
B) Destruction of a plant in a fire accident
C) Loss of equipment over time due to wear and tear
D) Closure of a plant due to lock out

43) Devaluation means:
A) converting rupee into gold
B) lowering of the value of one currency in comparison of some foreign currency
C) making rupee dealer in comparison to some foreign currency
D) None of these

44) Devaluation of currency by a country is meant to lead to : (1) expansion of import trade, (2) promotion of import substitution, (3) expansion of export trade.
A) 1 only
B) 2 and 3
C) 1 and 2
D) 1 and 4

45) Devaluation of currency leads to?
A) Erratic fluctuations in domestic prices
B) No impact on domestic prices
C) Increase in domestic prices
D) Fall in domestic prices

46) Development expenditure of the Central government does not include?
A) Expenditure on economic services
B) Defence expenditure
C) Grant to states
D) Expenditure on social and community services

47) Disguised unemployment in India is mainly related to : (1) agricultural sector, (2) rural area, (3) factory sector, (4) urban area.
A) 1 and 2
B) 1 and 3
C) 2 and 4
D) 3 and 4

48) During which 5-year Plan did prices show a decline?
A) First
B) Third
C) Fifth
D) None of these

49) During which Five Year Plan was the total expenditure on agriculture the highest?
A) First Five Year Plan
B) Second Five Year Plan
C) Third Five Year Plan
D) Fourth Five Year PIan

50) During which Plan period did agricultural production register a negative growth?
A) First
B) Second
C) Third
D) Fourth