MCQOPTIONS
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MCQOPTIONS
This section includes 94 Mcqs, each offering curated multiple-choice questions to sharpen your Economics knowledge and support exam preparation. Choose a topic below to get started.
| 1. |
Which statement is correct regarding FDI? I. FDI is a non-debt capital flow, is a leading source of external financing, especially for the developing economies. II. It not only brings in capital and technical know- how but also increases the competitiveness of the economy. III. Overall it supplements domestic investment, much required for sustaining the high growth rate of the country. IV. Since 2000, significant changes have been made in the FDI policy regime by the government to ensure that India becomes an increasingly attractive and investor-friendly destination. |
| A. | I & II |
| B. | II & III |
| C. | Only IV |
| D. | All the above |
| Answer» E. | |
| 2. |
Consider the following statements: I. Agriculture, horticulture, poultry, fisheries and dairying have been included in export-oriented units. II. Export processing zone units have also been allowed to export through trading and star trading houses and can have equipment on lease. Which of the following statements are true regarding Export Units: |
| A. | Only II |
| B. | Only I |
| C. | Both I & II |
| D. | None of the above |
| Answer» D. None of the above | |
| 3. |
Which points are correct regarding SEZ act? I. Exemption to SEZ developer and units from Minimum Alternate Tax. II. Constitution of an authority for each SEZ with a view to providing greater administrative, financial and functional autonomy to these zones. III. Establishment of designated courts and a single enforcement agency to ensure speedy trial and investigation of offences committed in SEZs. |
| A. | I & II |
| B. | Only II |
| C. | Only III |
| D. | All the above |
| Answer» E. | |
| 4. |
What are the objectives of SEZ act? I. Generation of additional economic activity. II. Promotion of exports of goods & services. III. Promotion of investment from domestic and foreign sources. IV. Creation of employment opportunities |
| A. | I & II |
| B. | II & IV |
| C. | Only III |
| D. | All the above |
| Answer» E. | |
| 5. |
Which of the below statements are correct regarding exchange trade? I. The value of rupee was managed by the state bank II. The strict foreign exchange controls also encouraged hawala trade III. India followed a strongly inward looking policy, laying stress on import substitution |
| A. | Only I |
| B. | Both II & III |
| C. | Only III |
| D. | All the above |
| Answer» C. Only III | |
| 6. |
Why there was the need for export promotion in India?I. Primary products exporting countries have an unfavourable term of trade. The earnings from primary product exports were low and unstableII. Secondly, the quality of Indian products was not up to the world standards due to which we could not sustain markets.III. Third, only residue products were mainly exported. The fact that export earnings also contribute to economic development was overlooked. |
| A. | I & III |
| B. | II & III |
| C. | Only III |
| D. | All the above |
| Answer» E. | |
| 7. |
What are the factors on which import substitution strategy was based on? I. Non price II. Physical interventionist policies like licensing. Quotas and other physical restrictions on imports |
| A. | only II |
| B. | Only I |
| C. | Both I & II |
| D. | None of the above |
| Answer» D. None of the above | |
| 8. |
Which unit of valuation is known as 'paper gold'? |
| A. | Eurodollar |
| B. | Petrodollar |
| C. | SDR |
| D. | GDR |
| Answer» D. GDR | |
| 9. |
Which statement is incorrect regarding balance of payment? I. BoP compares the dollar difference of the amount of exports and imports, including all financial exports and imports. II. A negative balance of payments means that more money is flowing out of the country than coming in and vice versa. III. The balance of payment is maintained by State Bank of India |
| A. | I & III |
| B. | Only III |
| C. | II & III |
| D. | Only I |
| Answer» C. II & III | |
| 10. |
Which statement is correct regarding Current account? I. Those transactions arising out of exports and imports (the visible items) II. It is a statistical statement of all transactions made between one particular country and all other countries during a specified period of time III. This account is the summary of all international trade transactions of the domestic country in one year |
| A. | I & II |
| B. | Only I |
| C. | II & III |
| D. | Only III |
| Answer» E. | |
| 11. |
Which one of the following types of borrowings from the IMF has the softest servicing conditions? |
| A. | Second tranche loan |
| B. | SAF |
| C. | ESAF |
| D. | Oil facility |
| Answer» D. Oil facility | |
| 12. |
What is meant by term Balance of Trade? I. Those transactions arising out of exports and imports (the visible items) II. It is a statistical statement of all transactions made between one particular country and all other countries during a specified period of time III. This account is the summary of all international trade transactions of the domestic country in one year |
| A. | I & III |
| B. | Only I |
| C. | Only II |
| D. | None of the above |
| Answer» C. Only II | |
| 13. |
Match the following percentage of world trade in different years of India: Year PercentageI.1950?sa.0.59%II.1990?sb. 2%III.2015c.1.78% |
| A. | I - b,II - c,III - a |
| B. | I - c,II - a,III - b |
| C. | I - a,II - b,III - c |
| D. | None of these |
| Answer» D. None of these | |
| 14. |
Why did the fixed exchange rate system collapsed? 1. The buildup of US debts abroad as a result of the need to fund the war in Vietnam II. Inflation in the USA III. Growing doubts about the stability of the US. |
| A. | Only I |
| B. | I & II |
| C. | II & III |
| D. | All the above |
| Answer» E. | |
| 15. |
Consider the following statements: 1. Kelkar Committee is associated to oil and gas. 2. Kelkar Committee has to prepare a roadmap for enhancing import of oil and gas. Which of the statements given above is/are correct? |
| A. | 1 only |
| B. | 2 only |
| C. | 1 and 2 |
| D. | None |
| Answer» B. 2 only | |
| 16. |
Consider the following statements: 1. The Foreign Exchange Management Act FEMA became an act on the 1st day of June, 2002. 2. It replaced FERA. 3. It made all offenses regarding foreign exchange civil offenses, as opposed to criminal offenses as dictated by FERA. Which of the statements given above is/are correct? |
| A. | 1 and 2 |
| B. | 2 and 3 |
| C. | 1 and 3 |
| D. | None |
| Answer» C. 1 and 3 | |
| 17. |
Consider the following: 1. International Bank for Reconstruction and Development (IBRD) 2. International Development Association (IDA) 3. International Finance Corporation (IFC) 4. Multilateral Investment Guarantee Agency (MIGA) 5. International Centre for Settlement of Investment Disputes (ICSID) Which among the above constitute the World Bank group? |
| A. | 1 2 |
| B. | 1 2 3 |
| C. | 1 2 3 4 |
| D. | 1 2 3 4 5 |
| Answer» E. | |
| 18. |
Consider the following:1.Balance of trade 2.Net factor income3. Net transfer paymentsWhich among the above make the part of the "Capital Account"? |
| A. | Only 1 |
| B. | 1 & 2 |
| C. | 2 & 3 |
| D. | 1, 2 & 3 |
| Answer» E. | |
| 19. |
Foreign Direct Investments are preferred over Capital Inflow. In this context, please consider the following. 1. FDI brings in latest technology 2. FDI does not involve large outflow 3. FDI improves working efficiency Which is/are most suitable reason/reasons for the given statement? |
| A. | 1 only |
| B. | 1 and 3 |
| C. | 1 and 2 |
| D. | All 1, 2 and 3 |
| Answer» E. | |
| 20. |
The earnings of India from diamond export is quite high. Which one of the following factors has contributed to it? |
| A. | pre-independene stock-piling of diamonds in the country which are now exported |
| B. | large production of industrial diamonds in the country |
| C. | expertise available for cutting and polishing of imported diamonds which are then exported |
| D. | as in the past, India produces huge quantity of gem diamonds which are exported |
| Answer» D. as in the past, India produces huge quantity of gem diamonds which are exported | |
| 21. |
Global capital-flows to developing countries increased significantly during the nineties. In view of the East Asian financial crisis and Latin American experience, which type of inflow is good for the host country? |
| A. | Commerical loans |
| B. | Foreign Direct Investment |
| C. | Foreign Portfolio Investment |
| D. | External Commercial Borrowings |
| Answer» C. Foreign Portfolio Investment | |
| 22. |
Which of the following were the aims behind the setting up of the World Trade Organization (WTO)? 1. promotion of free trade and resource flows across countries 2. protection of intellectual property rights 3. managing balanced trade between different countries 4. promotion of trade between the former East Bloc countries and the Western World |
| A. | 1, 2, 3 and 4 |
| B. | 1 and 2 |
| C. | 2 and 3 |
| D. | 1 and 4 |
| Answer» C. 2 and 3 | |
| 23. |
A new term Lourdes Treatment and Resuscitation Option (LTRO) was making news in context with which among the following? |
| A. | World Bank |
| B. | International Monetary Fund |
| C. | European Central Bank |
| D. | Federal Reserve Bank of America |
| Answer» D. Federal Reserve Bank of America | |
| 24. |
IMF can grant loan to _______? |
| A. | Any sovereign country of the World |
| B. | Any sovereign country of the World and Public Sector companies backed by Sovereign guarantee |
| C. | Any Member country of IMF |
| D. | Any Member country of IMF and Public Sector |
| Answer» D. Any Member country of IMF and Public Sector | |
| 25. |
In context with the two way trade of India with different regions, which among the following region is India's largest trade partner? |
| A. | EU Region |
| B. | Gulf Region |
| C. | North America |
| D. | Latin America |
| Answer» C. North America | |
| 26. |
Which among the following is the most important source region of NRI remittances to India? |
| A. | North America |
| B. | Europe |
| C. | Asia Pacific |
| D. | South America |
| Answer» B. Europe | |
| 27. |
Asian Financial Crisis of 1997 started from which of the following countries? |
| A. | Myanmar |
| B. | Thailand |
| C. | Cambodia |
| D. | Malaysia |
| Answer» C. Cambodia | |
| 28. |
Dumping in the context of international trade refers to : |
| A. | Exporting goods at prices below the cost of production |
| B. | Exporting goods of inferior quality |
| C. | Exporting goods only to re-import them at cheaper rates |
| D. | Exporting goods without paying appropriate taxes in the receiving country |
| Answer» B. Exporting goods of inferior quality | |
| 29. |
TRIPS (Trade Related aspects of Intellectual Property Rights) agreements is administered by |
| A. | United Nations Conference on Trade and Development (UNCTAD) |
| B. | United Nations Organization (UNO) |
| C. | World Trade Organization (WTO) |
| D. | World Bank (WB) |
| Answer» D. World Bank (WB) | |
| 30. |
Both Foreign Direct Investment (PDI) and Foreign Institutional Investor (FII) are related to investment in a country. Which one of the following statements best represents an important difference between the two? |
| A. | FII helps bring better management skills and technology, while FDI only brings in capital. |
| B. | FII helps in increasing capital availability in general, while FDI only targets specific sectors. |
| C. | FDI flows only into the secondary market while FII targets primary market |
| D. | FII is considered to be more stable than FDI. |
| Answer» C. FDI flows only into the secondary market while FII targets primary market | |
| 31. |
A great deal of Foreign Direct Investment (FDI) to India comes from Mauritius than from many major and mature economies like UK and France. Why? |
| A. | India has preference for certain countries as regards receiving FDI |
| B. | India has double taxation avoidance agreement with Mauritius |
| C. | Most citizens of Mauritius have ethnic identity with India and so they feel secure to invest in India |
| D. | Impending dangers of global climatic change prompt Mauritius to make huge investments in India |
| Answer» C. Most citizens of Mauritius have ethnic identity with India and so they feel secure to invest in India | |
| 32. |
Which of the following is/are included in the capital budget of the Government of India? (IAS Prelims 2016) 1. Expenditure on acquisition of assets like roads, buildings, machinery, etc. 2. Loans received from foreign governments 3. Loans and advances granted to the States and Union Territories Select the correct answer using the code given below. |
| A. | 1 only |
| B. | 2 and 3 only |
| C. | 1 and 3 only |
| D. | 1, 2 and 3 |
| Answer» E. | |
| 33. |
There has been a persistent deficit budget year after year. Which action/actions of the following can be taken by the Government to reduce the deficit? [IAS Prelims 2016] 1. Reducing revenue expenditure 2. Introducing new welfare schemes 3. Rationalizing subsidies 4. Reducing import duty Select the correct answer using the code given below. |
| A. | 1 only |
| B. | 2 and 3 only |
| C. | 1 and 3 only |
| D. | 1, 2, 3 and 4 |
| Answer» D. 1, 2, 3 and 4 | |
| 34. |
In India, the tax proceeds of which one of the following as a percentage of gross tax revenue has significantly declined in the last five years? |
| A. | Service tax |
| B. | Personal income tax |
| C. | Excise duty |
| D. | Corporation tax |
| Answer» D. Corporation tax | |
| 35. |
Which one at the following is responsible for the preparation and presentation of Union Budget to the Parliament? |
| A. | Department of Revenue |
| B. | Department of Economic Affairs |
| C. | Department of Financial Services |
| D. | Department of Expenditure |
| Answer» C. Department of Financial Services | |
| 36. |
Who among the following appoints a Finance Commission under Article 280 of the Constitution? 1. Prime Minister2. Finance Minister 3. President 4. Public |
| A. | 1 only |
| B. | 2 only |
| C. | 3 only |
| D. | 3 and 4 |
| Answer» D. 3 and 4 | |
| 37. |
Which of the following is the tax on income of the companies? 1. Corporation tax 2. Reliable tax 3. Compensatory tax |
| A. | 1 only |
| B. | 2 only |
| C. | 3 only |
| D. | 1, 2 and 3 |
| Answer» B. 2 only | |
| 38. |
Which among the following is/are the nodal agency for implementing the monetary policy? State Bank of India Reserve Bank of India Union Bank |
| A. | 1 only |
| B. | 1 and 2 |
| C. | 2 only |
| D. | 1, 2 and 3 |
| Answer» D. 1, 2 and 3 | |
| 39. |
Consider the following statements with regard to Statutory Liquidity Ratio (SLR) 1. To meet SLR, Commercial banks can use cash only. 2. SLR is maintained by the banks with themselves. 3. SLR restricts the bank?s leverage in pumping more money into the economy Which of the statements given above is/are correct? |
| A. | 1, 2 and 3 |
| B. | 1 and 3 |
| C. | 2 and 3 |
| D. | only 2 |
| Answer» D. only 2 | |
| 40. |
Choose the correct one from the below expressions 1. Fiscal deficit = Budget deficit – Government’s market borrowing and liabilities 2. Fiscal deficit = Budget deficit + Government's market borrowing and liabilities 3. Fiscal deficit = Revenue expenditure - Budget receipts 4. Fiscal deficit = Revenue expenditure + Budget receipts |
| A. | 1 only |
| B. | 2 only |
| C. | 3 only |
| D. | None of the above |
| Answer» C. 3 only | |
| 41. |
Which of the following is/are the components of Public debt? 1. External debt 2. Other internal liabilities 3. Internal debt |
| A. | 1 only |
| B. | 1 and 2 |
| C. | 3 only |
| D. | 1, 2 and 3 |
| Answer» E. | |
| 42. |
Which of the following statements is incorrect about Repo and Reverse Repo? 1. At present, the repo rate is 11.75 % 2. At present, the reverse repo rate is 5.75 % 3. Repo rate is the rate at which RBI lends to commercial banks 4. Reverse Repo is the rate at which RBI borrows from commercial banks |
| A. | 1 only |
| B. | 1 and 2 |
| C. | 1, 3 and 4 |
| D. | None of the above |
| Answer» B. 1 and 2 | |
| 43. |
Which of the following taxes is the one by which the revenue collected rises proportionally with income? 1. Regressive tax 2. Progressive tax 3. Corporate tax 4. Proportional tax |
| A. | 1 only |
| B. | 2 only |
| C. | 3 only |
| D. | 4 only |
| Answer» E. | |
| 44. |
Where was VAT introduced? 1. France2. USA 3. Australia 4. China |
| A. | 1 only |
| B. | 1 and 2 |
| C. | 3 only |
| D. | 1, 2 and 3 |
| Answer» B. 1 and 2 | |
| 45. |
Which of the following is not a technique of Deficit financing? 1. Internal Borrowings 2. Counting Currency 3. Printing Currency 4. External aid and borrowings |
| A. | 1 only |
| B. | 2 only |
| C. | 2 and 3 |
| D. | 1, 2, 3 and 4 |
| Answer» C. 2 and 3 | |
| 46. |
In which year was Service tax introduced? 1. 1983-842. 1994-95 3. 1967-68 4. 2003-2004 |
| A. | I only |
| B. | 2 only |
| C. | 3 only |
| D. | 4 only |
| Answer» C. 3 only | |
| 47. |
Which of the following is the tax imposed on commodities imported into India (import duty) or those exported from India (export duty)? 1. Customs duty2. Central excise duty 3. Incorporate duty |
| A. | 1 only |
| B. | 2 only |
| C. | 3 only |
| D. | 2 and 3 |
| Answer» B. 2 only | |
| 48. |
Which of the following statements is incorrect in regards to Black money? 1. Hawala market has deep roots with this black money 2. It is unaccounted money which is concealed from tax authorities 3. All legal economic activities are dealt with this Black Money 4. It puts an adverse pressure on equitable distribution of wealth and income in the economy |
| A. | 1 only |
| B. | 1 and 2 |
| C. | 3 only |
| D. | 1, 2 and 4 |
| Answer» D. 1, 2 and 4 | |
| 49. |
With reference to Union Budget, which of the following is/are covered under Non-Plan Expenditure? 1. Defence expenditure 2. Interest payments 3. Salaries and pensions 4. Subsidies Select the correct answer using the code given below. |
| A. | 1 only |
| B. | 2 and 3 only |
| C. | 1, 2, 3 and 4 |
| D. | None |
| Answer» D. None | |
| 50. |
Consider the following statements: The Indian rupee is fully convertible: 1. in respect of Current Account of Balance of payment 2. in respect of Capital Account of Balance of payment 3. into gold Which of these statements is/are correct? |
| A. | 1 alone |
| B. | 3 alone |
| C. | 1 and 2 |
| D. | 1, 2 and 3 |
| Answer» B. 3 alone | |