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HeMantra EduTech
Economics (55 MCQs)

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1. Consider the following statements regarding the Indian economy:
1. The share of agriculture in India's GDP has been steadily increasing since the 1991 economic reforms.
2. More than 50% of India's workforce is engaged in the agricultural sector.
3. The Green Revolution led to a decline in regional disparities in agricultural productivity.
Which of the statements given above is/are correct?
a) 1 and 2 only b) 2 only
c) 1 and 3 only d) 2 and 3 only

2. With reference to India's economic structure, consider the following statements:

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1. India follows a capitalist model where the private sector controls all major industries.
2. The unorganized sector employs a higher percentage of the workforce than the organized sector.
3. Economic liberalization led to an increase in the contribution of the service sector to GDP.

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Which of the statements given above is/are correct?
a) 1 and 2 only b) 2 and 3 only
c) 1 and 3 only d) 1, 2, and 3
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3. Consider the following statements about India's economic development:
1. The Gini coefficient is a measure of income inequality, and a higher value indicates greater inequality.
2. The Human Development Index (HDI) includes GDP per capita, life expectancy, and education indicators.
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3. India’s HDI rank has remained stagnant in the last decade without any improvement.
Which of the statements given above is/are correct?
a) 1 and 2 only b) 2 and 3 only
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c) 1 and 3 only d) 1, 2, and 3

4. With reference to India’s workforce and employment patterns, consider the following statements:
1. The Periodic Labour Force Survey (PLFS) is conducted annually to assess employment trends in India.
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2. The majority of India’s workforce is engaged in regular, formal employment with social security benefits.
3. India has a higher proportion of self-employed workers compared to wage employees.
Which of the statements given above is/are correct?
a) 1 and 2 only b) 2 and 3 only
c) 1 and 3 only d) 1, 2, and 3

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5. Consider the following statements regarding India's external sector and globalization:
1. After the 1991 economic reforms, India’s current account balance has remained in surplus due to increased
exports.
2. Foreign Direct Investment (FDI) is generally considered more stable than Foreign Portfolio Investment (FPI).
3. The service sector plays a crucial role in India's export earnings, with IT services being a major contributor.
Which of the statements given above is/are correct?
a) 1 and 2 only b) 2 and 3 only
c) 1 and 3 only d) 1, 2, and 3

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6. Consider the following statements regarding GDP and its types:
1. Nominal GDP accounts for changes in price levels over time, making it a better measure of real economic growth.
2. Real GDP is adjusted for inflation, providing a more accurate representation of a nation's economic progress.

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3. GDP at Factor Cost includes indirect taxes but excludes subsidies.
Which of the statements given above is/are correct?
a) 1 and 2 only b) 2 only
c) 1 and 3 only d) 2 and 3 only
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7. With reference to national income aggregates, consider the following statements:
1. GNP includes income earned by Indian residents abroad but excludes income earned by foreigners in India.
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2. NNP is always greater than GNP.
3. NDP is derived by subtracting depreciation from GDP.
Which of the statements given above is/are correct?
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a) 1 and 3 only b) 2 and 3 only

c) 1 and 2 only d) 1, 2, and 3

8. Consider the following statements about money supply in India:

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1. M1 includes currency in circulation, demand deposits in banks, and other highly liquid assets.
2. M3 is also known as Broad Money and includes M1 plus time deposits in banks.
3. M4 is the most liquid measure of money supply, as it includes all types of deposits in banks and post offices.
Which of the statements given above is/are correct?
a) 1 and 2 only b) 2 only
c) 1 and 3 only d) 1, 2, and 3

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9. With reference to the classification of money, consider the following statements:
1. Fiat money derives its value from trust and is not backed by any physical commodity.
2. Fiduciary money, like cheques and promissory notes, is legally recognized as a medium of exchange.
3. The Indian Rupee is an example of fiat money.
Which of the statements given above is/are correct?
a) 1 and 3 only b) 2 and 3 only
c) 1 and 2 only d) 1, 2, and 3

10. Consider the following statements about the importance of national income measurement:

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1. It helps in economic planning by providing a statistical basis for policy making.
2. A high per capita income always indicates equitable income distribution.
3. The Central Statistical Office (CSO) under MOSPI is responsible for calculating national income in India.

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Which of the statements given above is/are correct?
a) 1 and 3 only b) 2 and 3 only
c) 1 and 2 only d) 1, 2, and 3
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11. Consider the following statements regarding the First Five-Year Plan (1951–56):
1. It was based on the Harrod-Domar Model, emphasizing investment-led growth.
2. The majority of financial resources were allocated to the industrial sector.
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3. It led to the establishment of the Indian Institutes of Technology (IITs).
Which of the statements given above is/are correct?
a) 1 and 2 only b) 1 only
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c) 2 and 3 only d) 1, 2, and 3

12. The Mahalanobis Model, which influenced India's Second Five-Year Plan, focused primarily on:
a) Strengthening the service sector
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b) Heavy industries and capital goods production

c) Agricultural self-sufficiency
d) Privatization and liberalization

13. Which of the following Five-Year Plans was terminated one year before completion due to
political instability?
a) Fourth Five-Year Plan b) Fifth Five-Year Plan
c) Sixth Five-Year Plan d) Seventh Five-Year Plan

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4. Consider the following statements regarding economic reforms in India:
1. The economic liberalization process began during the Eighth Five-Year Plan.
2. The Seventh Five-Year Plan was the last to be fully implemented before economic reforms started.
3. The Twelfth Five-Year Plan was never formally approved by the NITI Aayog.
Which of the statements given above is/are correct?
a) 1 and 2 only b) 2 and 3 only
c) 1 and 3 only d) 1, 2, and 3

15. With reference to unemployment in India, which of the following is an example of disguised

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unemployment?
a) A software engineer losing a job due to an economic slowdown
b) A farmer’s family members working on a small plot despite not being fully utilized

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c) A factory worker being laid off temporarily due to low demand
d) A fresh graduate waiting for job opportunities

16. Which of the following types of unemployment is most likely to occur due to automation and
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technological advancements?
a) Frictional unemployment
b) Structural unemployment
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c) Cyclical unemployment
d) Seasonal unemployment
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17. Which of the following Five-Year Plans introduced the concept of ‘Faster, Sustainable, and More
Inclusive Growth’?
a) Ninth Five-Year Plan
b) Tenth Five-Year Plan
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c) Eleventh Five-Year Plan

d) Twelfth Five-Year Plan

18. The Green Revolution, which boosted agricultural production in India, was introduced during
which Five-Year Plan?
a) Third Five-Year Plan b) Fourth Five-Year Plan
c) Fifth Five-Year Plan d) Sixth Five-Year Plan

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19. Which Five-Year Plan adopted the slogan ‘Garibi Hatao’ (Remove Poverty)?
a) Third Five-Year Plan
b) Fourth Five-Year Plan
c) Fifth Five-Year Plan
d) Sixth Five-Year Plan

20. Which government body replaced the Planning Commission in 2015?

a) Ministry of Finance
b) Reserve Bank of India (RBI)

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c) NITI Aayog
d) Central Economic Committee

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21. Consider the following statements regarding India’s Direct Tax system:
1. Corporate tax is applicable to both domestic and foreign companies operating in India.
2. The Direct Tax Code (DTC) replaced the Income Tax Act of 1961 in 2020.
3. Wealth Tax was abolished in 2016 and replaced by the Securities Transaction Tax (STT).
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Which of the statements given above is/are correct?
a) 1 only
b) 1 and 2 only
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c) 2 and 3 only
d) 1, 2, and 3
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22. Which of the following is NOT a distinguishing feature of GST in India?

a) It follows a destination-based taxation system.
b) It replaced all direct taxes levied by the central and state governments.
c) It has multiple tax slabs for different categories of goods and services.
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d) It is administered by both central and state governments.

23. The tax-to-GDP ratio is an important indicator of a country’s fiscal health. As per recent
estimates, India's tax-to-GDP ratio is closest to which of the following values?
a) 8-10%
b) 10-12%
c) 15-17%
d) 20-22%

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24. Which of the following statements about India's tax reforms is correct?
a) The faceless assessment system applies only to corporate taxpayers.
b) The Vivad se Vishwas Scheme was introduced to resolve tax disputes.
c) The Direct Tax Code (DTC) replaced the Income Tax Act in 2021.
d) E-filing of taxes is only applicable to individuals earning above ₹50 lakh per year.

25. The income tax in India follows which taxation system?

a) Regressive taxation
b) Flat taxation

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c) Progressive taxation
d) Proportional taxation

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26. Consider the following statements regarding inflation:
1. Cost-push inflation occurs when demand for goods increases rapidly.
2. Demand-pull inflation occurs due to rising production costs.
3. Core inflation excludes food and fuel prices from its calculation.
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Which of the statements given above is/are correct?
a) 1 and 2 only
b) 2 and 3 only
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c) 3 only
d) 1, 2, and 3
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27. The Fiscal Responsibility and Budget Management (FRBM) Act aims to control:
a) Foreign Direct Investment (FDI)
b) Non-Performing Assets (NPAs)
c) Fiscal deficit and government borrowing
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d) Inflation caused by excess demand

28. Which of the following measures will NOT directly help in reducing inflation?
a) Increasing the Cash Reserve Ratio (CRR)
b) Reducing the Repo Rate
c) Selling government bonds in the open market
d) Reducing fiscal deficit through spending cuts

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29. If RBI increases the Repo Rate, which of the following effects is likely to be observed?
a) Higher inflation and increased borrowing
b) Lower inflation and reduced borrowing
c) Higher fiscal deficit
d) Increase in bank lending

30. Which of the following statements about Special Economic Zones (SEZs) is correct?
a) SEZs are governed by state governments and have no central regulations.
b) SEZs are established to boost exports by offering tax and business incentives.

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c) SEZs cannot have foreign companies operating within them.
d) SEZs impose higher taxes on companies to generate more revenue.

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31. The Cash Reserve Ratio (CRR) is maintained by banks with:
a) Customers
b) The Reserve Bank of India (RBI)
c) The Ministry of Finance
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d) The Securities and Exchange Board of India (SEBI)

32. Which institution is responsible for formulating India's Monetary Policy?

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a) NITI Aayog
b) Ministry of Finance
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c) Reserve Bank of India (RBI)

d) Securities and Exchange Board of India (SEBI)

33. Which of the following reports is NOT published by the International Monetary Fund (IMF)?
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a) World Economic Outlook (WEO)

b) Global Financial Stability Report (GFSR)
c) Ease of Doing Business Report
d) None of the above

34. The World Bank consists of which of the following institutions?

1. International Monetary Fund (IMF)
2. International Bank for Reconstruction and Development (IBRD)
3. International Development Association (IDA)

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 4. International Finance Corporation (IFC)
Select the correct answer using the codes below:
a) 1, 2, and 3 only
b) 2, 3, and 4 only
c) 1, 3, and 4 only
d) 1, 2, 3, and 4

35. The New Development Bank (NDB), also known as the BRICS Bank, differs from the World Bank
in which of the following ways?

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1. It only lends to BRICS countries.
2. It does not impose policy conditions on loans.
3. It focuses on funding sustainable development projects.

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Which of the statements given above is/are correct?
a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
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d) 1, 2, and 3

36. The World Trade Organization (WTO) follows which of the following principles?
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1. Non-discrimination (Most Favored Nation Principle)
2. Protectionism in trade policies
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3. Promotion of free trade by reducing tariffs and barriers

4. Resolving disputes through bilateral negotiations only
Select the correct answer:
a) 1 and 3 only
b) 2 and 4 only
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c) 1, 3, and 4 only
d) 1, 2, and 3 only

37. Basel Accords, developed by the Bank for International Settlements (BIS), focus on:
a) Regulating international trade policies
b) Establishing guidelines for banking sector stability
c) Controlling inflation in developing economies
d) Providing financial assistance to developing countries

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38. Where is the headquarters of the World Trade Organization (WTO) located?
a) Washington, D.C., USA
b) Geneva, Switzerland
c) New York, USA
d) Paris, France

39. Which of the following functions is NOT performed by the Reserve Bank of India (RBI)?
a) Regulating commercial banks
b) Controlling foreign exchange reserves

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c) Providing direct loans to small businesses
d) Issuing currency notes

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40. Which financial institution was set up to provide long-term finance to large-scale industries in
India?
a) NABARD
b) IDBI
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c) SIDBI
d) NHB
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41. Consider the following statements regarding NABARD:
1. It provides credit to the agriculture sector and rural infrastructure development.
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2. It was established on the recommendation of the Narasimham Committee.

3. It refinances regional rural banks and cooperative banks.
Which of the statements given above is/are correct?
a) 1 and 3 only
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b) 2 and 3 only
c) 1 and 2 only
d) 1, 2, and 3

42. The primary function of the EXIM Bank of India is to:

a) Regulate foreign exchange rates
b) Promote and finance international trade
c) Provide loans for agricultural projects
d) Manage India's foreign exchange reserves

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43. Which one of the following objectives of the Pradhan Mantri Jan Dhan Yojana (PMJDY) is
incorrect?
(a) Promotes financial inclusion by providing banking services to all
(b) Offers RuPay debit card with accidental insurance coverage
(c) Provides a fixed monthly income to account holders
(d) Enables Direct Benefit Transfer (DBT) for government subsidies

44. Which of the following features of the Pradhan Mantri Mudra Yojana (PMMY) is correct?
(a) Provides collateral-free loans to small businesses and entrepreneurs

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(b) It extended funding support for activities allied to agriculture also
(c) It has three loan categories – Shishu, Kishore, and Tarun
(d) Loans under PMMY can go up to ₹10 lakh

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45. Which one of the following is NOT a benefit of the Pradhan Mantri Ujjwala Yojana (PMUY)?
(a) Free LPG connection for BPL families
(b) Subsidized refills for beneficiaries
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(c) Direct financial aid to purchase LPG stoves
(d) Reduces indoor air pollution and improves health
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46. Which one of the following objectives of Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana
(PM-JAY) is incorrect?
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(a) Provides free health insurance coverage up to ₹5 lakh per family per year
(b) Covers hospitalization expenses, including surgeries and medicines
(c) Provides financial assistance for outpatient treatments and medicines
(d) Ensures cashless treatment at empaneled hospitals
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47. Which of the following features of the Swachh Bharat Mission (SBM) is incorrect?
(a) Focuses on eliminating open defecation in rural and urban areas
(b) Includes the construction of household, public, and community toilets
(c) Provides free waste collection services for all households
(d) Encourages behavioral change campaigns for sanitation and hygiene

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48. Which of the following objectives of Atmanirbhar Bharat Abhiyan is incorrect?
(a) Supports local manufacturing and Make in India initiatives
(b) Provides financial assistance and incentives to MSMEs
(c) Aims to increase India’s reliance on imports for essential goods
(d) Introduces Production Linked Incentive (PLI) schemes

49. Under which Article of the Indian Constitution is the Union Budget presented?
(a) Article 110
(b) Article 112

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(c) Article 117
(d) Article 120

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50. What does the capital budget NOT include?
(a) Capital receipts
(b) Capital expenditure
(c) Infrastructure investment
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(d) Tax revenue

51. Which of the following statements about the types of budgets is incorrect?
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(a) The Union Budget is presented by the Central Government.
(b) The State Budget is presented by State Governments.
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(c) The Union Budget includes only capital expenditure.

(d) Both Union and State Budgets contain revenue and capital components.

52. How is the Fiscal Deficit calculated?

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(a) Total expenditure – Total revenue (including borrowings)

(b) Total revenue – Total expenditure
(c) Total expenditure – Total revenue (excluding borrowings)
(d) Total revenue – Capital receipts

53. What is the Primary Deficit?

(a) Fiscal deficit – Revenue deficit (b) Fiscal deficit – Capital deficit
(c) Fiscal deficit – Interest payments (d) Revenue deficit – Capital receipts

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54. Who presented the first budget of independent India?
(a) Jawaharlal Nehru
(b) Morarji Desai
(c) R.K. Shanmukham Chetty
(d) Yashwantrao Chavan

55. Which of the following is NOT a component of the Revenue Budget?

(a) Grant given to States
(b) Direct and Indirect Taxes

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(c) Interest payment for Loan
(d) Recovered loan from States

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-Thank you-
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