- Which of the following is not a method of estimating national income?
(A) Income Method
(B) Output Method
(C) Expenditure Method
(D) Investment Method
Answer: (D)
Explanation: National income is estimated using income (wages, rent, etc.), output (value added), and expenditure (consumption, investment) methods. Investment method is not a standard approach, unlike the others used in India’s GDP calculations. - The concept of economic growth is based on –
(A) Increase in savings
(B) Increase in national income
(C) Price rise
(D) None of the above
Answer: (B)
Explanation: Economic growth is measured by a sustained increase in real national income, like India’s GDP growth, reflecting higher output, not just savings or price rises, which may indicate inflation. - Which of the following is a component of Gross Domestic Product at factor cost?
(A) Indirect taxes
(B) Net exports
(C) Compensation to employees
(D) Capital receipts
Answer: (C)
Explanation: GDP at factor cost includes factor incomes like compensation to employees (wages). In India, workers’ salaries contribute to this, unlike indirect taxes (added for market price) or net exports (expenditure method). - Which of the following is not included in the calculation of GDP?
(A) Services of a doctor
(B) Sale of used car
(C) Tuition fees paid to a tutor
(D) Salary of a teacher
Answer: (B)
Explanation: GDP counts only new production, like doctor’s services or teacher’s salary in India. Selling a used car is a transfer of existing assets, not new output, so it’s excluded. - Which among the following is not a qualitative credit control method?
(A) Rationing of credit
(B) Moral suasion
(C) Open market operations
(D) Regulation of consumer credit
Answer: (C)
Explanation: Qualitative credit controls, like credit rationing or moral suasion, target specific sectors in India. Open market operations, involving bond sales, are quantitative, affecting overall money supply. - The inflation rate in India is measured by –
(A) Consumer Price Index (CPI)
(B) Wholesale Price Index (WPI)
(C) GDP Deflator
(D) Producer Price Index (PPI)
Answer: (A)
Explanation: India’s inflation is primarily measured by CPI, reflecting retail price changes for consumers (e.g., food, fuel), guiding RBI’s policy, unlike WPI (wholesale) or GDP deflator (overall prices). - Which Five-Year Plan is also called the ‘Rolling Plan’?
(A) Fifth
(B) Sixth
(C) Seventh
(D) None of these
Answer: (A)
Explanation: The Fifth Five-Year Plan (1974–79) was termed a ‘Rolling Plan’ under the Janata government, allowing annual adjustments, unlike fixed plans, though it was later revised. - Which sector contributes the most to India’s GDP in recent years?
(A) Agriculture
(B) Industry
(C) Services
(D) Construction
Answer: (C)
Explanation: The services sector, including IT, banking, and retail, contributes over 50% to India’s GDP, driven by growth in cities like Bengaluru, surpassing agriculture or industry. - Which of the following taxes is levied by the Central Government and collected by both Centre and States?
(A) GST
(B) Corporate tax
(C) Excise duty
(D) Income tax
Answer: (A)
Explanation: GST, levied by the Centre, is shared with states via CGST and SGST, unifying tax collection on goods and services in India, unlike corporate or income taxes, which are Centre-exclusive. - What does ‘LPG’ stand for in the context of Indian economic reforms?
(A) Liberalisation, Privatisation, Globalisation
(B) Legalisation, Planning, Growth
(C) Law, Policy, Governance
(D) Liberalism, Planning, Governance
Answer: (A)
Explanation: LPG refers to India’s 1991 reforms: liberalisation (deregulation), privatisation (PSU stake sales), and globalisation (trade openness), transforming the economy, unlike other terms. - Which one of the following is not included in the capital receipts of the budget?
(A) Recovery of loans
(B) Borrowing from public
(C) Income tax
(D) Disinvestment
Answer: (C)
Explanation: Capital receipts include loan recoveries, borrowings, and disinvestment in India. Income tax is a revenue receipt, funding recurring expenses, not capital investments. - The ‘Hirakud Project’ is related to –
(A) Multi-purpose river project
(B) Power generation only
(C) Irrigation only
(D) Drinking water only
Answer: (A)
Explanation: The Hirakud Project on the Mahanadi River in Odisha is a multi-purpose initiative, providing irrigation, power, and flood control, unlike single-purpose projects. - The term ‘core inflation’ excludes –
(A) Food and fuel prices
(B) Manufactured goods
(C) Imported goods
(D) Government services
Answer: (A)
Explanation: Core inflation excludes volatile food and fuel prices, focusing on stable price trends. In India, it guides RBI’s monetary policy, unlike manufactured or imported goods’ inclusion. - Which of the following is not a part of the WTO?
(A) General Agreement on Tariffs and Trade
(B) General Agreement on Trade in Services
(C) Trade Related Intellectual Property Rights
(D) International Monetary Fund
Answer: (D)
Explanation: The WTO oversees trade agreements like GATT, GATS, and TRIPS. The IMF, focused on exchange rate stability, is separate, not part of WTO’s trade framework. - The concept of “Microfinance” is most suitable for –
(A) Large enterprises
(B) Small farmers and poor entrepreneurs
(C) Government departments
(D) Exporters
Answer: (B)
Explanation: Microfinance provides small loans to poor entrepreneurs and farmers in India, like through SHGs, enabling income generation, unlike large enterprises or exporters. - The Phillips Curve represents the relationship between –
(A) Unemployment and Inflation
(B) Interest rate and Investment
(C) Consumption and Income
(D) Savings and Investment
Answer: (A)
Explanation: The Phillips Curve shows a short-run trade-off between unemployment and inflation. In India, lower unemployment may raise wages, pushing inflation, though long-run effects differ. - A non-tax revenue source for the government is –
(A) GST
(B) Income tax
(C) Interest receipts
(D) Excise duty
Answer: (C)
Explanation: Non-tax revenue, like interest receipts from loans in India, supplements government funds, unlike tax sources such as GST, income tax, or excise duty. - The largest employment provider in India is –
(A) Public Sector
(B) Private Sector
(C) Agriculture Sector
(D) MSME Sector
Answer: (C)
Explanation: Agriculture employs the most people in India, supporting rural livelihoods, though its GDP share is lower than services, unlike public or MSME sectors. - Which of the following is not an objective of monetary policy?
(A) Price Stability
(B) Full Employment
(C) Equal Income Distribution
(D) Economic Growth
Answer: (C)
Explanation: Monetary policy, managed by RBI, targets price stability, employment, and growth. Income distribution is addressed by fiscal policy, not monetary tools. - The term ‘bear market’ refers to –
(A) Rising stock prices
(B) Falling stock prices
(C) Stable market
(D) None of the above
Answer: (B)
Explanation: A bear market indicates falling stock prices, reflecting pessimism. In India, a BSE Sensex decline signals a bear market, unlike bullish (rising) or stable conditions. - Which body is responsible for issuing coins in India?
(A) RBI
(B) Ministry of Finance
(C) SEBI
(D) SBI
Answer: (B)
Explanation: The Ministry of Finance, via mints, issues coins in India, while RBI manages currency notes and circulation, distinct from SEBI or SBI’s roles. - Fiscal policy is used to correct –
(A) Inflation
(B) Deflation
(C) Income inequality
(D) All of the above
Answer: (D)
Explanation: Fiscal policy, through taxation and spending, addresses inflation (reducing demand), deflation (boosting spending), and inequality (via subsidies) in India, tackling multiple issues. - When was the Banking Regulation Act enacted?
(A) 1947
(B) 1949
(C) 1950
(D) 1951
Answer: (B)
Explanation: The Banking Regulation Act, enacted in 1949, governs banking operations in India, empowering RBI to regulate banks, post-independence, unlike other years. - The term “Blue Economy” refers to –
(A) Ocean resources and economy
(B) Tech startups
(C) Rural banking
(D) Space research
Answer: (A)
Explanation: The Blue Economy leverages ocean resources, like India’s fisheries and ports, for sustainable growth, unlike tech startups or rural banking initiatives. - The aim of the Pradhan Mantri Kaushal Vikas Yojana (PMKVY) is –
(A) Health care
(B) Skill development
(C) Infrastructure
(D) Urban housing
Answer: (B)
Explanation: PMKVY, launched in 2015, focuses on skill development to enhance employability in India, training youth for industries, unlike health or housing schemes. - Which organisation is known as the lender of the last resort?
(A) SEBI
(B) World Bank
(C) RBI
(D) IMF
Answer: (C)
Explanation: RBI acts as the lender of last resort, providing emergency funds to banks in India, ensuring financial stability, unlike SEBI or global institutions like IMF. - The term “Fiscal Drag” refers to –
(A) Reduced inflation due to taxation
(B) Automatic increase in tax revenue due to inflation
(C) Tax evasion
(D) Fiscal deficit reduction
Answer: (B)
Explanation: Fiscal drag occurs when inflation pushes incomes into higher tax brackets, increasing revenue without policy changes, as seen in India’s progressive tax system. - A country is said to be in a debt trap if –
(A) It has to borrow to repay old debts
(B) It cannot export
(C) It defaults on loans
(D) It has high fiscal surplus
Answer: (A)
Explanation: A debt trap arises when a country, like some developing nations, borrows to service existing debts, unlike India’s managed debt, distinct from export or surplus scenarios. - What is the full form of SIDBI?
(A) Small Industries Development Bank of India
(B) Social Investment and Development Bank of India
(C) Sustainable Industrial Development Board of India
(D) State Industrial Development Board of India
Answer: (A)
Explanation: SIDBI supports MSMEs in India with financing and development services, fostering small-scale industries, unlike other acronyms or state-level bodies. - Inflation targeting in India is based on –
(A) WPI
(B) CPI
(C) GDP deflator
(D) Base year index
Answer: (B)
Explanation: RBI’s inflation targeting, set at 4% (±2%), uses CPI to reflect consumer price changes in India, guiding monetary policy, unlike WPI or GDP deflator. - Which of the following schemes promotes financial inclusion?
(A) Ayushman Bharat
(B) Jan Dhan Yojana
(C) Ujjwala Yojana
(D) PMGSY
Answer: (B)
Explanation: Jan Dhan Yojana provides bank accounts to unbanked Indians, promoting financial inclusion with access to credit and insurance, unlike health or infrastructure schemes. - The National Income of India is measured in –
(A) Constant Prices
(B) Current Prices
(C) Both A and B
(D) None of these
Answer: (C)
Explanation: India’s national income is measured at constant prices (real GDP, adjusted for inflation) and current prices (nominal GDP), providing comprehensive economic insights. - Which of the following deals with the regulation of the insurance sector in India?
(A) RBI
(B) IRDAI
(C) SEBI
(D) NABARD
Answer: (B)
Explanation: IRDAI regulates India’s insurance sector, ensuring financial stability and consumer protection, unlike RBI (banking), SEBI (securities), or NABARD (rural credit). - Disguised unemployment is mostly found in –
(A) Industrial sector
(B) Agricultural sector
(C) IT sector
(D) Financial sector
Answer: (B)
Explanation: Disguised unemployment, where workers add little to output, is prevalent in Indian agriculture, with excess labor on farms, unlike organized sectors like IT. - India’s first mutual fund was launched by –
(A) SBI
(B) LIC
(C) UTI
(D) HDFC
Answer: (C)
Explanation: Unit Trust of India (UTI), established in 1964, launched India’s first mutual fund, enabling retail investment, later followed by banks and private players. - Which institution regulates chit funds in India?
(A) RBI
(B) SEBI
(C) State Governments
(D) Ministry of Finance
Answer: (C)
Explanation: State governments regulate chit funds in India under the Chit Funds Act, 1982, overseeing local savings schemes, unlike RBI or SEBI’s financial market roles. - Which of the following organisations provides short-term crop loans to farmers?
(A) NABARD
(B) SIDBI
(C) RBI
(D) SEBI
Answer: (A)
Explanation: NABARD refinances short-term crop loans for farmers in India, supporting agricultural credit through cooperatives and banks, unlike SIDBI’s MSME focus. - Minimum Support Price (MSP) is recommended by –
(A) FCI
(B) Ministry of Agriculture
(C) Commission for Agricultural Costs and Prices
(D) NABARD
Answer: (C)
Explanation: The Commission for Agricultural Costs and Prices (CACP) recommends MSP for crops in India, ensuring farmers’ income stability, with government approval. - The ‘Ease of Doing Business’ report is released by –
(A) IMF
(B) World Bank
(C) WTO
(D) UNDP
Answer: (B)
Explanation: The World Bank’s Ease of Doing Business report ranks countries, including India, on business regulations, guiding reforms to attract investment, unlike IMF or WTO reports. - Public goods are –
(A) Excludable and rival
(B) Non-excludable and rival
(C) Excludable and non-rival
(D) Non-excludable and non-rival
Answer: (D)
Explanation: Public goods, like India’s national defense, are non-excludable (all benefit) and non-rival (one’s use doesn’t reduce others’), unlike private or club goods. - The rupee is a –
(A) Fully convertible currency
(B) Partially convertible currency
(C) Non-convertible currency
(D) Pegged currency
Answer: (B)
Explanation: The Indian rupee is partially convertible, freely traded for current account transactions but restricted for capital account, managed by RBI, unlike fully convertible currencies. - ‘Venture Capital’ is a form of –
(A) Long-term debt
(B) Equity financing for startups
(C) Working capital loan
(D) Overdraft facility
Answer: (B)
Explanation: Venture capital provides equity financing to startups in India, like tech firms, supporting innovation with high-risk investments, unlike loans or overdrafts. - Which sector is known as the “sunrise sector” in India?
(A) IT
(B) Textile
(C) Mining
(D) Agriculture
Answer: (A)
Explanation: India’s IT sector, driven by software exports and startups in Bengaluru, is a sunrise sector, showing rapid growth, unlike traditional sectors like textiles or agriculture. - A decrease in demand with no change in supply results in –
(A) Increase in price
(B) Decrease in price
(C) No change in price
(D) Increase in supply
Answer: (B)
Explanation: A demand decrease, with unchanged supply, lowers equilibrium price in India’s markets (e.g., electronics), as surplus goods prompt price cuts, unlike supply shifts. - Which of the following is included in the tertiary sector?
(A) Fishing
(B) Banking
(C) Manufacturing
(D) Mining
Answer: (B)
Explanation: The tertiary sector includes services like banking in India, supporting economic transactions, unlike primary (fishing, mining) or secondary (manufacturing) sectors. - NPA in banking refers to –
(A) Net Performing Assets
(B) Non-Performing Assets
(C) Net Priority Advances
(D) None of the above
Answer: (B)
Explanation: Non-Performing Assets (NPAs) are loans in India where borrowers default on payments, impacting bank health, addressed through RBI’s restructuring measures. - Basel Norms are related to –
(A) Agriculture policy
(B) Banking supervision
(C) WTO guidelines
(D) Income tax
Answer: (B)
Explanation: Basel Norms set global banking standards, like capital adequacy, adopted by Indian banks under RBI to ensure stability, unlike agriculture or WTO rules. - What is the main objective of fiscal policy in India?
(A) Growth with stability
(B) Control inflation
(C) Reduce unemployment
(D) All of the above
Answer: (D)
Explanation: India’s fiscal policy aims for growth, inflation control, and unemployment reduction, using budgets to fund infrastructure and social schemes, addressing multiple goals. - “Global Hunger Index” is released by –
(A) WHO
(B) UNDP
(C) IFPRI
(D) World Bank
Answer: (C)
Explanation: The International Food Policy Research Institute (IFPRI) releases the Global Hunger Index, assessing India’s nutrition challenges, unlike WHO or UNDP reports. - Which ministry prepares the Union Budget in India?
(A) Ministry of Commerce
(B) Ministry of Planning
(C) Ministry of Finance
(D) Ministry of Corporate Affairs
Answer: (C)
Explanation: The Ministry of Finance prepares India’s Union Budget, outlining revenue and expenditure plans, presented annually by the Finance Minister, unlike other ministries.