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Indian Economy GK Questions with Answers – Page 26

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Indian Economy multiple choice questions with answers and explanations, 20 per page, for SSC, Banking, UPSC, Railway and state exams.

1127 questions

Indian Economy NotesOnly previous-year questions (580)GK Quiz
Q501.Indian EconomyAsked in: UPSC Civil Services · CSE Prelims 2021, GS Paper IEasy

Which one of the following is likely to be the most inflationary in its effects?

  1. A.Repayment of public debt
  2. B.Borrowing from the public to finance a budget deficit
  3. C.Borrowing from the banks to finance a budget deficit
  4. D.Creation of new money to finance a budget deficit
Show answer
Correct answer: D. Creation of new money to finance a budget deficit

Printing new money adds fresh purchasing power to the economy without any matching rise in goods, so it pushes prices up the most.

Q502.Indian EconomyAsked in: UPSC Civil Services · CSE Prelims 2022, GS Paper IHard

Which one of the following situations best reflects "Indirect Transfers" often talked about in media recently with reference to India?

  1. A.An Indian company investing in a foreign enterprise and paying taxes to the foreign country on the profits arising out of its investment
  2. B.A foreign company investing in India and paying taxes to the country of its base on the profits arising out of its investment
  3. C.An Indian company purchases tangible assets in a foreign country and sells such assets after their value increases and transfers the proceeds to India
  4. D.A foreign company transfers shares and such shares derive their substantial value from assets located in India
Show answer
Correct answer: D. A foreign company transfers shares and such shares derive their substantial value from assets located in India

That is exactly what an indirect transfer means in Indian tax law. In an indirect transfer, no Indian asset changes hands directly.

Q503.Indian EconomyAsked in: NDA · NDA-I 2020, GATEasy

The Five Year Plan was first launched in

  1. A.China
  2. B.USSR
  3. C.India
  4. D.Bhutan
Show answer
Correct answer: B. USSR

The Soviet Union under Joseph Stalin launched the world's first Five Year Plan in 1928. The first Soviet plan, for 1928 to 1932, set targets for rapid industrial growth and collectivised agriculture, with the state deciding what to produce.

Q504.Indian EconomyAsked in: UPSC CAPF · CAPF 2019, Paper IMedium

Which one of the following is NOT correct ?

  1. A.The Average Revenue and Marginal Revenue curves of a perfectly competitive firm are perfectly elastic
  2. B.The Marginal Revenue curve of the monopoly firm is above its Average Revenue curve
  3. C.In the long-run, a competitive firm earns only normal profits
  4. D.In equilibrium, the Marginal Cost Curve of the monopoly firm may be rising, falling or constant
Show answer
Correct answer: B. The Marginal Revenue curve of the monopoly firm is above its Average Revenue curve

A monopoly's marginal revenue curve lies below its average revenue curve, not above it. A monopolist faces the whole market's downward-sloping demand curve, which is its average revenue curve.

Q505.Indian EconomyAsked in: UPSC CAPF · CAPF 2025, Paper IMedium

The comparative advantage theory (CAT) is a trade theory that describes the basis of two nations engaging in trade. Which one among the following statements regarding the theory is not correct?

  1. A.David Ricardo was the author of the CAT.
  2. B.The CAT is explained in the book titled On the Principles of Political Economy and Taxation that was first published in 1817.
  3. C.According to the CAT, the nation which does not have absolute advantage in any goods cannot benefit from trade.
  4. D.The two nations that engage in trade can gain from specializing in the commodity in which they have a comparative advantage.
Show answer
Correct answer: C. According to the CAT, the nation which does not have absolute advantage in any goods cannot benefit from trade.

The whole point of comparative advantage is that a country gains from trade even when it has no absolute advantage in any good.

Q506.Indian EconomyAsked in: UPSC CAPF · CAPF 2026, Paper IEasy

What does the term 'Orange Economy' refer to?

  1. A.Economic activities linked to creativity, culture and intellectual property that generate income and jobs
  2. B.Economic activities linked to desert ecosystems and their unique socio-environmental characteristics
  3. C.Economic activities linked to the aging population, including health care, leisure, and services for older adults
  4. D.Informal, unaccounted, or illegal economic activities that evade taxation and regulation
Show answer
Correct answer: A. Economic activities linked to creativity, culture and intellectual property that generate income and jobs

The orange economy is another name for the creative economy. The term was popularised by a 2013 Inter-American Development Bank book, and orange was chosen because it is often linked with culture and creativity.

Q507.Indian EconomyAsked in: UPSC CAPF · CAPF 2019, Paper IEasy

According to the Law of Diminishing Returns, in a production function when more and more units of the variable factor are used, holding the quantities of a fixed factor constant, a point is reached beyond which

  1. A.the marginal revenue will diminish
  2. B.the average revenue will diminish
  3. C.the marginal product will diminish
  4. D.the marginal product will increase
Show answer
Correct answer: C. the marginal product will diminish

When one input is kept fixed and another is added again and again, each extra unit eventually adds less to output than the one before.

Q508.Indian EconomyAsked in: UPSC CAPF · CAPF 2025, Paper IMedium

Which of the following statements about the relationship between price elasticity of demand and type of firm is/are correct? 1. Perfectly elastic demand is associated with a competitive firm. 2. Perfectly inelastic demand is associated with a monopolistically competitive firm. Select the answer using the code given below.

  1. A.1 only
  2. B.2 only
  3. C.Both 1 and 2
  4. D.Neither 1 nor 2
Show answer
Correct answer: A. 1 only

A firm in perfect competition faces a perfectly elastic demand curve, but a monopolistically competitive firm faces a downward-sloping, fairly elastic one, not a perfectly inelastic one.

Q509.Indian EconomyAsked in: UPSC CAPF · CAPF 2026, Paper IMedium

In the context of labour market of an economy, consider the following statements : 1. Labour Force Participation Rate is defined as the share of employed and unemployed workers to the total working-age population. 2. Worker Population Ratio is defined as the share of unemployed workers to the total working-age population. 3. The usual activity status of a person is determined on the basis of the activities pursued by the person during the specified reference period of the last 365 days preceding the date of survey. Which of the statements given above is/are correct?

  1. A.1 only
  2. B.2 only
  3. C.1 and 3 only
  4. D.1, 2 and 3
Show answer
Correct answer: C. 1 and 3 only

Statements 1 and 3 give the standard definitions, but the Worker Population Ratio counts the employed, not the unemployed. In India these measures come from the Periodic Labour Force Survey.

Q510.Indian EconomyAsked in: UPSC CAPF · CAPF 2025, Paper IMedium

Which among the following regarding the nature of goods and income elasticity are correctly matched? (Nature of Goods : Income Elasticity) 1. Necessity : Between 0 and 1 2. Luxury : More than 1 3. Inferior : More than 0 Select the answer using the code given below.

  1. A.1 and 3 only
  2. B.2 and 3 only
  3. C.1 and 2 only
  4. D.1, 2 and 3
Show answer
Correct answer: C. 1 and 2 only

Necessities and luxuries are matched correctly, but an inferior good has a negative income elasticity, not a positive one. Income elasticity of demand is the percentage change in quantity demanded divided by the percentage change in income.

Q512.Indian EconomyAsked in: CDS · CDS-II 2019, GKHard

The Public Financial Management System (PFMS) is a web-based online software application designed, developed, owned and implemented by the

  1. A.Department of Financial Services
  2. B.Institute of Government Accounts and Finance
  3. C.Controller General of Accounts
  4. D.National Institute of Financial Management
Show answer
Correct answer: C. Controller General of Accounts

PFMS is run by the office of the Controller General of Accounts (CGA) in the Department of Expenditure, Ministry of Finance.

Q515.Indian EconomyAsked in: UPSC Civil Services · CSE Prelims 2021, GS Paper IEasy

Which one of the following effects of creation of black money in India has been the main cause of worry to the Government of India?

  1. A.Diversion of resources to the purchase of real estate and investment in luxury housing
  2. B.Investment in unproductive activities and purchase of precious stones, jewellery, gold, etc.
  3. C.Large donations to political parties and growth of regionalism
  4. D.Loss of revenue to the State Exchequer due to tax evasion
Show answer
Correct answer: D. Loss of revenue to the State Exchequer due to tax evasion

Black money is, by definition, income hidden from the tax authorities, so its most direct and serious effect is the tax the government never receives.

Q516.Indian EconomyAsked in: UPSC Civil Services · CSE Prelims 2022, GS Paper IMedium

Which of the following activities constitute real sector in the economy ?

1. Farmers harvesting their crops

2. Textile mills converting raw cotton into fabrics

3. A commercial bank lending money to a trading company

4. A corporate body issuing Rupee Denominated Bonds overseas

Select the correct answer using the code given below:

  1. A.1 and 2 only
  2. B.2, 3 and 4 only
  3. C.1, 3 and 4 only
  4. D.1, 2, 3 and 4
Show answer
Correct answer: A. 1 and 2 only

The real sector produces actual goods and services, so harvesting crops and making cloth belong to it, while lending and issuing bonds belong to the financial sector.

Q517.Indian EconomyAsked in: UPSC Civil Services · CSE Prelims 2021, GS Paper IMedium

Consider the following statements :

The effect of devaluation of a currency is that it necessarily

1. improves the competitiveness of the domestic exports in the foreign markets

2. increases the foreign value of domestic currency

3. improves the trade balance

Which of the above statements is/are correct?

  1. A.1 only
  2. B.1 and 2
  3. C.3 only
  4. D.2 and 3
Show answer
Correct answer: A. 1 only

Devaluation makes domestic goods cheaper abroad, so export competitiveness improves, but it lowers the external value of the currency and does not necessarily improve the trade balance.

Q518.Indian EconomyAsked in: UPSC Civil Services · CSE Prelims 2025, GS Paper IMedium

Consider the following statements :

I. Capital receipts create a liability or cause a reduction in the assets of the Government.

II. Borrowings and disinvestment are capital receipts.

III. Interest received on loans creates a liability of the Government.

Which of the statements given above are correct?

  1. A.I and II only
  2. B.II and III only
  3. C.I and III only
  4. D.I, II and III
Show answer
Correct answer: A. I and II only

Capital receipts either add to liabilities or reduce assets, and borrowings and disinvestment are typical examples; interest received is a revenue receipt.

Q519.Indian EconomyAsked in: UPSC Civil Services · CSE Prelims 2022, GS Paper IHard

With reference to the Indian economy, what are the advantages of "Inflation-Indexed Bonds (IIBs)"?

1. Government can reduce the coupon rates on its borrowing by way of IIBs.

2. IIBs provide protection to the investors from uncertainty regarding inflation.

3. The interest received as well as capital gains on IIBs are not taxable.

Which of the statements given above are correct?

  1. A.1 and 2 only
  2. B.2 and 3 only
  3. C.1 and 3 only
  4. D.1, 2 and 3
Show answer
Correct answer: A. 1 and 2 only

IIBs protect investors from inflation, and because of that protection the government can borrow at a lower coupon; they carry no special tax exemption.

Q520.Indian EconomyMedium

Under the Pradhan Mantri Shram Yogi Maandhan scheme, an eligible unorganised worker receives a monthly pension after the age of sixty of

  1. A.One thousand rupees
  2. B.Two thousand rupees
  3. C.Three thousand rupees
  4. D.Five thousand rupees
Show answer
Correct answer: C. Three thousand rupees

The scheme, launched in 2019, is open to an unorganised worker between eighteen and forty years of age with a monthly income up to fifteen thousand rupees, and gives an assured monthly pension of three thousand rupees after sixty on a matching contribution, the worker and the government each paying…