MCQs on Indian Economy

An economy can be defined as a process of making economic choices on how the country utilises its resources to manufacture and allocate its goods and services. The Indian economy that was known as an underdeveloped economy has now become a developing economy. However, it is described as a mixed economy.

Given below are some essential MCQs on Indian economy to analyse your understanding of the topic. The answers are also given for your reference.

MCQs on Indian Economy

1.What option does the central government not include in the development expenditure?

A) Grants to states

B) Expenditure on social and community services

C) Expenditure on economic services

D) Defence expenditure

Answer: D

2. Which of the following defines depreciation?

A) Destruction of a plant in a fire accident

B) Loss of equipment over time due to wear and tear

C) Closure of a plant due to labour trouble

D) Closure of a plant due to lockout

Answer: B

3. Generally, deficit financing can create inflation. However, it can be checked if _________.

A) government expenditure increases the aggregate supply in the aggregate demand ratio.

B) all the investment is indicated as payment on national debt only.

C) only the aggregate demand is increased.

D) All of the above

Answer: D

4.With which of the following did the ARDC merged with on 12 July, 1982?


B) EXIM Bank


D) None of the above

Answer: A

5. What is the main cause of the export surplus?

A) The country’s stringent import policy

B) Developments in national and international markets

C) The country’s exports promotion value

D) None of the above

Answer: B

6. If RBI reduces the cash reserve ratio, what will happen to the credit creation?

A) There will be no impact.

B) It will decrease.

C) It will increase.

D) None of the above

Answer: C

7. Which option is not mentioned in a firm’s balance sheet?

A) Cash held at the bank

B) Revenue from sales of the company’s products

C) Total issued capital

D) Value of the stocks of raw materials held

Answer: B

8. Which of the following does the state financial corporation in the State Bank of India give special assistance to?

A) Medium and small-scale industries

B) Large-scale industries

C) Cottage industry

D) Agricultural farms

Answer: A

9. Which of the following are the central cooperative banks directly associated with?

A) Central government

B) Land development banks

C) State cooperative banks

D) Farmers

Answer: C

10. The first complete Indian Bank was established in which year?

A) 1794

B) 1894

C) 1896

D) 1902

Answer: B

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