790+ Indian Economy Solved MCQs

These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Bachelor of Business Administration (BBA) , Bachelor of Arts (BA) , Bachelor of Arts in Economics (BA Economics) , Union Public Service Commission (UPSC) .

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151.	When was the decimal system of currency introduced in India?
A.	1948
B.	1950
C.	1954
D.	1957
Answer» D. 1957

152.	Which of the following prints currency notes of the denomination of Rs. 100?
A.	The Bank Note Press, Dewas
B.	The Indian Security Press, Nasik Road
C.	The Security Printing Press, Hyderabad
D.	All of the above
Answer» A. The Bank Note Press, Dewas

153.	The highest denomination of currency notes in circulation as legal tender in India is at present:
A.	Rs. 50
B.	Rs.100
C.	Rs. 500
D.	Rs.1000
Answer» D. Rs.1000

154.	The special paper required for printing of currency notes by the Security Presses In the country is manufactured at :
A.	Hyderabad
B.	Kolkata
C.	Hoshangabad
D.	Dewas
Answer» C. Hoshangabad

155.	Which of the following mints undertakes refining of gold for licensed gold dealers and production of medals for defence services?
A.	The Hyderabad Mint
B.	The Mumbai Mint
C.	The Kolkata Mint
D.	None of the above
Answer» B. The Mumbai Mint

156.	To meet the growing needs for coins in the country, where does the Government propose to set up another mint?
A.	Nasik
B.	Hoshangabad
C.	Dewas
D.	Noida
Answer» D. Noida

157.	For international payments, the Indian currency is linked to :
A.	American Dollar
B.	British Sterling
C.	Gold Standard
D.	None of the above
Answer» A. American Dollar

158.	How many languages are used on a ten rupee note?
A.	2
B.	7
C.	10
D.	15
Answer» D. 15

159.	Convertibility of the rupee implies: [IAS 1994]
A.	being able to convert rupee notes into gold
B.	freely permitting the conversion of rupee to other major currencies and vice versa
C.	allowing the value of the rupee to be fixed by market forces
D.	developing an international market for currencies in India
Answer» B. freely permitting the conversion of rupee to other major currencies and vice versa

160.	Black money is :
A.	counterfeit currency
B.	illegally earned money
C.	money earned through underhand deals
D.	income on which payment of tax is usually evaded
Answer» D. income on which payment of tax is usually evaded

162.	The Issue Department of the RBI maintains a _______ against printing of notes:
A.	Minimum Reserve System
B.	Proportional Reserve System
C.	Proportional Gold Reserve System
D.	Proportional Foreign Securities Reserve System
Answer» A. Minimum Reserve System

163.	Devaluation of currency by a country is meant to lead to : 1. expansion of import trade 2. promotion of import substitution 3. expansion of export trade
A.	1 only
B.	2 and 3
C.	1 and 2
D.	1 and 4
Answer» B. 2 and 3

164.	Which of the following is incorrect about convertibility?
A.	The exchange rate should be determined by the forces of demand and supply of the currency
B.	The exchange rate' would indicate the strength of the economy
C.	It would discourage black market transactions
D.	The RBI will be a direct player now rather than being an indirect one
Answer» D. The RBI will be a direct player now rather than being an indirect one

165.	The States' debt does not include:
A.	loans from State Bank of India
B.	loans from the Central Government
C.	Provident Funds
D.	treasury bills issued to international financial institutions
Answer» D. treasury bills issued to international financial institutions

166.	Consider the following statement: The price of any currency in international market is determined by the: 1. WTO 2. Demand for goods/services provided by the country concerned 3. Inflation differential between the country concerned and its major trading partners 4. Stability of the government of the concerned country Of these statements:
A.	1, 2, 3, and 4 are correct
B.	1, 2 and 4 are correct
C.	1, 3 and 4 are correct
D.	2, 3 and 4 are correct
Answer» D. 2, 3 and 4 are correct

167.	Hard Currency is defined as currency:
A.	which can hardly be used for international transactions
B.	which is used in times of war
C.	which loses its value very fast
D.	traded in foreign exchange market for which demand is persistently relative to the supply
Answer» D. traded in foreign exchange market for which demand is persistently relative to the supply

168.	The Indian Rupee is fully convertible: 1. In respect of Current Account of Balance of Payments 2. In respect of Capital Account of Balance of Payments 3. Into Gold Which of these statements is/are correct ?
A.	1 only
B.	3 only
C.	1 and 2 only
D.	1, 2 and 3
Answer» A. 1 only

169.	Consider the following statements: The price of any currency in international market is decided by the [IAS 1998] 1. World Bank 2. Demand for goods/services provided by the country concerned 3. stability of the government of the concerned country 4. economic potential of the country in question Of these statements:
A.	1, 2, 3 and 4 are correct
B.	2 and 3 are correct
C.	3 and 4 are correct
D.	1 and 4 are correct
Answer» B. 2 and 3 are correct

170.	Inflation implies: [Railways 1994]
A.	rise in budget deficit
B.	rise in money supply
C.	rise in general price index
D.	rise in prices of consumer goods
Answer» C. rise in general price index

171.	The situation with increasing unemployment and inflation is termed as: [CPO AC 2003]
A.	hyperinflation
B.	galloping inflation
C.	stagflation
D.	reflation
Answer» C. stagflation

172.	Which of the following factors contributes to an inflationary trend?
A.	15% fall in production of industrial goods
B.	15% increase in prices of agricultural products
C.	15% increase in supply of money in the market
D.	none of these
Answer» C. 15% increase in supply of money in the market

173.	Which of the following can be used for checking inflation temporarily?
A.	Increase in wages
B.	Decrease in money supply
C.	Decrease in taxes
D.	None of the above
Answer» B. Decrease in money supply

174.	Who among the following are not protected against inflation.? [Railways 1992]
A.	Salaried class
B.	Industrial workers
C.	Pensioners
D.	Agricultural farmers
Answer» D. Agricultural farmers

175.	An essential attribute of inflation is:
A.	fall in production
B.	increase in prices
C.	absence of black market
D.	presence of black market
Answer» B. increase in prices

176.	The best means of saving during inflation is to keep:
A.	money
B.	Government Bonds
C.	equity
D.	time deposits with Banks
Answer» A. money

790+ Indian Economy Solved MCQs

When was the decimal system of currency introduced in India?

Which of the following prints currency notes of the denomination of Rs. 100?

The highest denomination of currency notes in circulation as legal tender in India is at present:

The special paper required for printing of currency notes by the Security Presses In the country is manufactured at :

Which of the following mints undertakes refining of gold for licensed gold dealers and production of medals for defence services?

To meet the growing needs for coins in the country, where does the Government propose to set up another mint?

For international payments, the Indian currency is linked to :

How many languages are used on a ten rupee note?

Convertibility of the rupee implies: [IAS 1994]

Black money is :

Broad money in India is :

The Issue Department of the RBI maintains a _______ against printing of notes:

Devaluation of currency by a country is meant to lead to : 1. expansion of import trade 2. promotion of import substitution 3. expansion of export trade

Which of the following is incorrect about convertibility?

The States' debt does not include:

Hard Currency is defined as currency:

The Indian Rupee is fully convertible: 1. In respect of Current Account of Balance of Payments 2. In respect of Capital Account of Balance of Payments 3. Into Gold Which of these statements is/are correct ?

Inflation implies: [Railways 1994]

The situation with increasing unemployment and inflation is termed as: [CPO AC 2003]

Which of the following factors contributes to an inflationary trend?

Which of the following can be used for checking inflation temporarily?

Who among the following are not protected against inflation.? [Railways 1992]

An essential attribute of inflation is:

The best means of saving during inflation is to keep:

The period of high inflation and low economic growth is termed as: [RRB 1992]

Stagflation implies a case of: [CDS 1992]

Inflation can be contained by:

Deficit financing creates additional paper currency to fill the gap between expenditure and revenue. This device aims at economic development but if it fails, it generates : [IFS 1990]

A steady increase in the general level of prices as a result of excessive increase in aggregate demand as compared to aggregate supply is termed as : [CDS 1999]

A high rate of inflation tends to worsen balance of payments because:

The effect of inflation on tax revenue results in a situation known as :

The sum of which of the following constitutes Broad Money in India? [IAS 1997] 1. Currency with the public 2. Demand deposits with banks 3. Time deposits with banks 4. Other deposits with RBI Choose the correct answer using the codes given below:

Rising prices lead to all but one of the following:

In the last one decade, which one among the following sectors has attracted the highest Foreign Direct Investment inflows into India? [IAS 2004]

Under the Constitution, the power to raise and disburse public funds:

There are three major groups of commodities in the Wholesale Price Index. These are: 1. primary articles 2. fuel, power, light and lubricants 3. manufactured products 4. food articles and industrial raw materials

Rupee was devalued by what percent in July 1991 ? [MP PCS 1990]

When was decimal coinage introduced in India? [CDS 2005]

Amongst the currency quotes USD/JPY, USD/Euro and USD/CAD, which one of the following is referred as the base currency for quotes? [Punjab & Sindh Bank 2011]

Which of the following is/are treated as artificial currency? [IAS 2010]

Which of the following measures should be taken when an economy is going through inflationary pressures? 1. The direct taxes should be increased. 2. The interest rate should be reduced. 3. The public spending should be increased Select the correct answer using the code given below: [CDS 2012] Code:

The terms of economics, the recession occurring two times with a small gap in between is known as [Bank of India PO 2010]

M1 includes:

M3 includes:

Which of the following Mahatma Gandhi series of currency notes issued by the RBI has a drawing of the 'Parliament House' depicted on it? [SSC Graduate 2003]

Which of the following Mahatma Gandhi series of currency notes issued by the RBI has "ecology" depicted on it? [SSC Graduate 2003]

The Indian Rupee is fully convertible:
1. In respect of Current Account of Balance of Payments
2. In respect of Capital Account of Balance of Payments
3. Into Gold
Which of these statements is/are correct ?

The sum of which of the following constitutes Broad Money in India? [IAS 1997]
1. Currency with the public
2. Demand deposits with banks
3. Time deposits with banks
4. Other deposits with RBI
Choose the correct answer using the codes given below:

There are three major groups of commodities in the Wholesale Price Index. These are:
1. primary articles
2. fuel, power, light and lubricants
3. manufactured products
4. food articles and industrial raw materials

Which of the following measures should be taken when an economy is going through inflationary pressures?
1. The direct taxes should be increased.
2. The interest rate should be reduced.
3. The public spending should be increased
Select the correct answer using the code given below: [CDS 2012] Code:

177.	The period of high inflation and low economic growth is termed as: [RRB 1992]
A.	stagnation
B.	take-off stage in economy
C.	stagflation
D.	none of these
Answer» C. stagflation

178.	Stagflation implies a case of: [CDS 1992]
A.	galloping inflation
B.	recession plus inflation
C.	adverse balance of trade
D.	rising wages and employment
Answer» B. recession plus inflation

179.	Inflation can be contained by:
A.	surplus budget
B.	increase in taxation
C.	reduction in public expenditure
D.	all the above
Answer» D. all the above

180.	Deficit financing creates additional paper currency to fill the gap between expenditure and revenue. This device aims at economic development but if it fails, it generates : [IFS 1990]
A.	inflation
B.	devaluation
C.	deflation
D.	demonetization
Answer» A. inflation

181.	A steady increase in the general level of prices as a result of excessive increase in aggregate demand as compared to aggregate supply is termed as : [CDS 1999]
A.	demand-pull inflation
B.	cost-push inflation
C.	stagflation
D.	structural inflation
Answer» A. demand-pull inflation

182.	A high rate of inflation tends to worsen balance of payments because:
A.	prices of imported goods rise
B.	prices of exported goods rise making exports less competitive
C.	prices of imported goods fall and hence more is imported
D.	prices of exported goods fall and hence less amount is obtained in terms of foreign exchange
Answer» B. prices of exported goods rise making exports less competitive

183.	The effect of inflation on tax revenue results in a situation known as :
A.	stagflation
B.	fiscaldrag
C.	reflation
D.	disinflation
Answer» B. fiscaldrag

184.	The sum of which of the following constitutes Broad Money in India? [IAS 1997] 1. Currency with the public 2. Demand deposits with banks 3. Time deposits with banks 4. Other deposits with RBI Choose the correct answer using the codes given below:
A.	1 and 2
B.	1, 2 and 3
C.	1, 2, 3 and 4
D.	1, 2 and 4
Answer» C. 1, 2, 3 and 4

185.	Rising prices lead to all but one of the following:
A.	promotion of inequalities
B.	generation of black money
C.	adverse effect on balance of payments
D.	adverse effect on speculation
Answer» D. adverse effect on speculation

186.	Consider the following statements about Wholesale Price Index (WPI) : 1. It captures the price movement extensively and is, therefore, taken as an indicator of inflation. 2. The office of the Economic adviser (OEA) is entrusted with the function of compilation and publication of the weekly wholesale price index number in India. Which of the statements given above is/are correct? [CDS 2009]
A.	I only
B.	II only
C.	Both I and II
D.	Neither I nor II
Answer» C. Both I and II