Indian Economy MCQ Set-10

Indian Economy MCQ Set-10

Q.1 Which of the following is the key tool for implementation of the monetary policy by the RBI?

A. Open Market Operation

B. Issuing of notes

C. Discount Rate

D. None of these

Answer: A. Open Market Operation

Note: Open market operations (OMOs), the purchase and sale of securities in the open market by a central bank–are a key tool used by the Federal Reserve in the implementation of monetary policy.

Q.2 The Reserve Bank of India does open market transaction in which of the following case(s)?

I. Inflation in the Market

II. Less supply of money in the market

III. Enhancing borrowing power of the commercial banks

A. Only I

B. Only II

C. Only III

D. Both I & II

Answer: D. Both I & II

Q.3 When Cash Reserve Ratio is reduced by the RBI, which of the following is likely to happen?

I. Low Interest rates on loans by banks

II. Increases supply of money in the market

III. High interest rates charged by the banks on loans

A. Only I

B. Only II

C. Only III

D. Both I & II

Answer: D. Both I & II

Note: When the Cash Reserve Ratio is reduced, more funds are available to banks for deploying in other businesses because they need to keep fewer amounts with RBI. This means that the banks would have more money to play and this leads to reduction of interest rates on Loans provided by the Banks.

Q.4 Which of the following is NOT a monetary tool?

A. Cash Reserve Ratio

B. Discount Rate

C. Open Market Operation

D. Deficit Financing

Answer: D. Deficit Financing

Note: The Central banks have four main monetary policy tools: the reserve requirement, open market operations, the discount rate, and interest on reserves. Deficit financing means generating funds to finance the deficit which results from an excess of expenditure over revenue.

Q.5 The another name of “Discount Rate” is:

A. Statutory Liquidity Ratio

B. CRR

C. Bank Rate

D. None of these

Answer: C. Bank Rate

Note: The discount rate or bank rate is a powerful tool used by the RBI to control liquidity and money supply in the market.

Q.6 Which of the following is NOT a function of the RBI?

A. Maintaining CRR

B. Issuing Coins

C. Printing Currency

D. Custodian of Foreign Currency

Answer: B. Issuing Coins

Note: Coins are issued by the Ministry of Finance in India.

Q.7 Which of the following is the CORRECT funding pattern of a Regional Rural Bank?

A. 35% Central Government, 25% Concerned State Government and 40% Sponsor Bank of the RRB

B. 50% Central Government, 15% Concerned State Government and 35% Sponsor Bank of the RRB

C. 35% Central Government, 35% Concerned State Government and 20% Sponsor Bank of the RRB

D. None of these

Answer: B. 50% Central Government, 15% Concerned State Government and 35% Sponsor Bank of the RRB

Q.8 The Punjab National Bank was nationalized in which of the following year?

A. 1969

B. 1972

C. 1976

D. 1994

Answer: A. 1969

Note: The Government of India (GOI) nationalized PNB and 13 other major commercial banks, on 19 July 1969.

Q.9 The Regional Rural Bank Bill was enacted in which of the following year?

A. 1975

B. 1976

C. 1982

D. None of these

Answer: B. 1976

Note: Regional Rural Banks were established under the provisions of an ordinance passed on 26 September 1975 and the RRB Act 1976 to provide sufficient banking and credit facility for agriculture and other rural sectors. As a result, five RRBs were set up on 2 October 1975 and the RRB act was passed in 1976.

Q.10 Which of the following is/are likely to happen if the Statutory Liquidity Ratio is increased?

I. Increase in loan interest rates of banks

II. Less money with commercial banks for lending

III. Higher money with commercial banks for lending

A. Only I

B. Only II

C. Both I & II

D. Both I & III

Answer: C. Both I & II

Note: If the SLR increases, it restricts the commercial bank’s lending capacity and helps in controlling the inflation by soaking the liquidity from the market. Consequently, banks will have less money available to lend, and they will charge higher interest rates on loans to keep up with their profit margin.

Indian Economy MCQ Set-9

Indian Economy MCQ Set-9

Q.1 For which of the following type of tax, union government impose it but the state governments collect it?

A. GST

B. Income Tax

C. Wealth Tax

D. Stamp Duty

Answer: D. Stamp Duty

Q.2 Which of the following is correct about “Tax Heaven”?

I. A country or place where wealthy individuals need to pay very less amount of tax.

II. A country or place where foreign investors have to pay very low effective rate of taxation.

III. A country or place where poor people are benefited from all types of direct or indirect taxes.

A. Only I

B. Only II

C. Only III

D. Both I & III

Answer: B. Only II

Q.3 In which of the following system of taxation, the tax rate decreases as the taxable amount increases?

A. Progressive Taxation

B. Regressive Taxation

C. Degressive Taxation

D. Proportional Taxation

Answer: B. Regressive Taxation.

Note: In progressive taxation, the tax rate increases with taxable amount.

Q.4 In which of the following taxation system, the tax rate is fixed irrespective of the taxable income?

A. Progressive Taxation

B. Regressive Taxation

C. Degressive Taxation

D. Proportional Taxation

Answer: D. Proportional Taxation

Q.5 What kind of income taxation system is present in India among the following?

A. Progressive Taxation

B. Regressive Taxation

C. Degressive Taxation

D. Proportional Taxation

Answer: C. Degressive Taxation

Note: There are four rates of  income tax  are applicable in India i.e. 5%, 10%, 20% and 30% which is progressive in nature initially but later on it becomes Proportional which is called degressive rate . Degressive tax is a mix of between the progressive tax and proportional tax.

Q.6 India has chosen model of dual GST of which of the following country?

A. Canada

B. Germany

C. France

D. China

Answer: A. Canada

Q.7 The term HUF is frequently found in taxation system in India, what does HUF stands for?

A. Hindu Undivided Family

B. Household Universal Frequency

C. Household Unit Factor

D. None of these

Answer: A. Hindu Undivided Family

Q.8 Which of the following is/are CORRECT about the “Gift Tax” in India?

I. The threshold for taxable amount for gift tax is Rs. 50000.00

II. It is exempted for cases such as gift from spouse, parents, blood relatives.

III. Gift tax is exempted for wills, inheritance, or gifts on marriage.

A. Only I

B. Only II

C. Only III

D. All, I, II and III

Answer: D. All, I, II and III

Q.9 The type of Income Tax levied on the gains after sale of investment or property is called as:

A. Capital Gains Tax

B. Securities Transaction Tax

C. Sales Tax

D. Wealth Tax

Answer: A. Capital Gains Tax

Q.10 What is the full form of UTGST?

A. Union Territory Goods and Service Tax

B. Unit Trust Goods and Service Tax

C. Unit Transaction Goods and Service Tax

D. None of these

Answer: A. Union Territory Goods and Service Tax

Note: UTGST means Union Territory Goods and Service Tax, and is an indirect tax that is collected when intra-state goods or services supplied, along with tax charged as under CGST ACT, 2017.

Indian Economy MCQ Set-8

Indian Economy MCQ Set-8

Q.1 The Competitive Commission of India (CCI) was founded in the year?

A. 2001

B. 2003

C. 2014

D. 2018

Answer: B. 2003

Note: Competition Commission of India is the competition regulator in India. It is a statutory body of the Government of India responsible for enforcing The Competition Act, 2002 and promoting competition throughout India and to prevent activities that have an appreciable adverse effect on competition in India. It was founded on 14th October, 2003.

Q.2 The Registrar of Companies is an office under which of the following?

A. Ministry of Corporate Affairs

B. Ministry of Finance

C. Ministry of Commerce and Industries

D. None of these

Answer: A. Ministry of Corporate Affairs

Note: The Registrar of Companies (ROC) is an office under the Indian Ministry of Corporate Affairs that deals with administration of the Companies Act, 2013, The Limited Liability Partnership Act, 2008, The Company Secretaries Act, 1980 and The Chartered Accountants Act, 1949.

Q.3 The Startup Indian initiative is a program under which of the following?

A. Ministry of Corporate Affairs

B. Ministry of Finance

C. Ministry of Commerce and Industries

D. None of these

Answer: C. Ministry of Commerce and Industries

Note: The startup India initiative was launched on 16th January, 2016.

Q.4 Service Tax was introduced in India in which of the following year?

A. 1994

B. 2004

C. 2006

D. 2016

Answer: A. 1994

Note: As on August, 2021, the rate of service tax is 15% in India.

Q.5 Under the Bank Rate, the RBI extends credit to:

A. Union Government

B. Commercial Banks

C. NBFC

D. None of these

Answer: B. Commercial Banks

Q.6 The “World Economic Outlook Report” is released by which of the following organization?

A. International Monetary Fund

B. World Bank

C. United Nations Economic and Social Council

D. None of these

Answer: A. International Monetary Fund

Q.7 Which of the following statement is CORRECT for nominal GDP?

I. Nominal GDP is calculated based on current prices.

II. Nominal GDP is calculated based on base prices.

III. Nominal GDP is calculated based on fixed prices.

A. Only I

B. Only II

C. Only III

D. None of these

Answer: A. Only I

Q.8 The data of National Income of India is released by which organization?

A. NITI Aayog

B. NSSO

C. RBI

D. CSO

Answer: D. CSO

Note: The GDP figures in India are released by the Central Statistics Office (CSO), which comes under the Ministry of Statistics and Program Implementation (MOSPI).

Q.9 Which of the following is/are form of Indirect Tax?

I. Income tax and wealth tax

II. Sales tax and custom duty

III. Corporation tax

A. Only I

B. Only II

C. Only III

D. Both II & III

Answer: B. Only II

Note: The forms of indirect taxes are sales tax, excise duty and custom duty and these are levied by the state governments.

Q.10 Custom duty is imposed on:

I. Imported goods

II. Exported goods

III. Imported services

A. Only I

B. Only II

C. Both I & II

D. Only III

Answer: C. Both I & II

Indian Economy MCQ Set-7

Indian Economy MCQ Set-7

Q.1 In which of the following year, the Union Government abolished the Banking Service Recruitment Boards (BSRBs)?

A. 1978

B. 2001

C. 2002

D. 2014

Answer: C. 2002

Note: The Banking Service Recruitment Boards (BSRBs) was established in 1978 in order to have a uniform standards & eligibility criteria for recruitment of personnel in public sector banks. However, it was abolished in May, 2002 after enactment of the Banking Services Commission (Repeal) Bill, 2002.

Q.2 Which of the following organization provides the Buffer Stock Financial Facility?

A. World Bank

B. International Monetary Fund

C. Asian Development Bank

D. None of these

Answer: B. International Monetary Fund

Note: Under the Buffer Stock Financial Facility, the IMF helps finance members’ contributions to approved international buffer stocks if the member demonstrates a balance of payments need.

Q.3 Which among the following is CORRECT about the Way and Means Advances of the RBI?

I. It is a credit policy to states, banking with the RBI.

II. It is a credit policy to the union government by the RBI

III. It is a credit policy to the commercial banks by the RBI.

A. Only I is correct

B. Only II is correct

C. Both I & II are correct

D. Only III is correct

Answer: A. Only I is correct

Note: Ways and means advances is a mechanism used by Reserve Bank of India under its credit policy to provide to States, banking with it, to help them tide over temporary mismatches in the cash flow of their receipts and payments.

Q.4 What is the full-form of WPI?

A. World-wide Price Index

B. World Petroleum Index

C. Wholesale Price Index

D. None of these

Answer: C. Wholesale Price Index

Note: Wholesale Price Index is used to measure the average change in price in the sale of goods in bulk quantity by the whole seller.

Q.5 What is the full-form of CPI?

A. Competitive Price Index

B. Consumer Price Index

C. Compared Price Index

D. None of these

Answer: B. Consumer Price Index

Note: Consumer Price Index measures the change in the price in the sale of goods or services in retail or directly to a consumer. India uses CPI as the central measure of inflation. 

Q.6  India’s first broad based benchmark of the Indian capital market is?

A. Sensex

B. Nifty

C. S&P; CNX 500

D. None of these

Answer: C. S&P; CNX 500

Q.7 Activities like exploration of natural resources falls under which sector of an economy?

A. Primary

B. Secondary

C. Tertiary

D. None of these

Answer: A. Primary

Note: As exploration of natural resources directly depends upon nature, therefore it comes under the primary sector of an economy/

Q.8 The first consumer protection bill was passed in which of the following year in India?

A. 1986

B. 1999

C. 1993

D. 2019

Answer: A. 1986

Q.9 Which of the following organization launched the RUCO initiative?

A. Reserve Bank of India

B. NITI Aayog

C. FSSAI

D. SBI

Answer: C. FSSAI

Note: FSSAI has launched ‘Repurpose Used Cooking Oil’ (RUCO) – an ecosystem to enable the collection and conversion of used cooking oil to biodiesel.

Q.10 Which of the following is responsible for implementing the essential commodity act?

A. FSSAI

B. FCI

C. State Governments

D. Union Government

Answer: C. State Governments

Note: The union government notifies the essential commodity act. However, it the responsibility of the state governments to implement it.

Indian Economy MCQ Set-6

Indian Economy MCQ Set-6

Q.1 Co-operative movement was initiated in which of the following sector in India?

A. Small Scale Enterprise

B. Agriculture

C. Banking

D. None of these

Answer: B. Agriculture

Q.2 The difference between revenue expenditure and revenue receipts is

A. Revenue deficit

B. Fiscal deficit

C. Income deficit

D. None of these

Answer: A. Revenue deficit

Note: When the difference between revenue receipts and revenue expenditure is negative, we have revenue deficit. It means that the government spends more than it earns.

Q.3 Which of the following country launched first-ever National Family Planning Programme?

A. India

B. China

C. Australia

D. Bangladesh

Answer: A. India

Note: India is the first country that launched a National Family Planning Programme in 1952, emphasizing fertility regulation for reducing birth rates.

Q.4 The family planning insurance scheme was introduced in India in which year?

A. 1952

B. 1990

C. 2005

D. 2015

Answer: C. 2005

Note: Family Planning Insurance Scheme (FPIS) was introduced w.e.f 29th November 2005 with Oriental Insurance Company, to take care of the cases of failure of Sterilization, Medical Complications or Death resulting from Sterilization, and also provide Indemnity Cover to the Doctor/Health Facility performing Sterilization procedure.

Q.5 National Mission for financial inclusion to ensure access to financial services, namely savings accounts, remittance, credit, insurance, pension in an affordable manner is the primary mission of:

A. Pradhan Mantri Kausal Yojana

B. Pradhan Mantri Jan Dhan Yojana

C. Pradhan Matri Kishan Yojana

D. None of these

Answer: B. Pradhan Mantri Jan Dhan Yojana

Note: Pradhan Mantri Jan Dhan Yojana, introduced in 2014 is a financial inclusion program of the Government of India open to Indian citizens, that aims to expand affordable access to financial services such as bank accounts, remittances, credit, insurance and pensions.

Q.6 Interest rate of saving bank account in India is decided by:

A. RBI

B. Ministry of Finance

C. Bank Themselves

D. None of these

Answer: C. Bank Themselves

Q.7 Interest Rate Risk arises from:

I. Fluctuating interest rate of bond owners.

II.  The sensitivity of fluctuating depends on two things, the bond’s time to maturity, and the coupon rate of the bond.

III. Share market variation

A. Only I

B. Only II

C. Only III

D. Both I & II

Answer: D. Both I & II

Q.8 The difference between total expenditure and total receipts is:

A. Capital deficit

B. Budget deficit

C. Fiscal deficit

D. None of these

Answer: B. Budget deficit

Q.9 In India, mutual funds are regulated by:

A. RBI

B. SEBI

C. SIDBI

D. IRDAI

Answer: B. SEBI

Note: As far as mutual funds are concerned, SEBI is the policymaker and also regulates the industry. It lays guidelines for mutual funds to safeguard the investors’ interest.

Q.10 Who among the following is responsible for maintaining and establishing an efficient accounting and financial reporting system in India?

A. RBI

B. Comptroller and Auditor General of India

C. NITI Aayog

D. None of these

Answer: B. Comptroller and Auditor General of India

Note: The duties and functions of the CAG as laid down by the Constitution are: Auditing the accounts related to all expenditure drawn from the Consolidated Fund of India, consolidated fund of every state and consolidated fund of every union territory having a Legislative Assembly.