UPSC Economy Practice Questions
Q1. With reference to land reforms in independent India, which one of the following statements is correct?
a) The ceiling laws were aimed at family holdings and not individual holdings.
b) The major aim of land reforms was providing agricultural land to all the landless
c) It resulted in cultivation of cash crops as a predominant form of cultivation.
d) Land reforms permitted no exemptions to the ceiling limits.
ans.b
Q2. In a given year in India, official poverty lines are higher in some States than in others because
a) poverty rates vary from State to State
b) price levels vary from State to State
c) Gross State Product varies from State to State
d) quality of public distribution varies from State to State
ans.b
Q3. Among the following which one is the largest exporter of rice in the world in the last
five years?
a) China
b) India
c) Myanmar
d) Vietnam
ans.b
Q4.With reference to Asian Infrastructure Investment Bank (AIIB), consider the following statements:
1. AIIB has more than 80 member nations.
2. India is the largest shareholder in AIIB.
3. AIIB does not have any members from outside Asia.
Which of the statements given above is/are correct?
a) 1 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
ans.a
Q5.The Chairman of public sector banks are selected by the
a) Banks Board Bureau
b) Reserve Bank of India
c) Union Ministry of Finance
d) Management of concerned bank
ans.a
Q6. Which one of the following is not a sub-index of the World Bank’s ‘Ease of Doing Business Index’?
a) Maintenance of law and order
b) Paying taxes
c) Registering property
d) Dealing with construction permits
ans.a
Q7.The economic cost of food grains to the Food Corporation of India is Minimum Support Price and bonus (if any) paid to the farmers plus
a) transportation cost only
b) interest cost only
c) procurement incidentals and distribution cost
d) procurement incidentals and charges for godowns
ans.c
Q8.The Service Area Approach was implemented under the purview of
a) Integrated Rural Development Programme
b) Lead Bank Scheme
c) Mahatma Gandhi National Rural Employment Guarantee Scheme
d) National Skill Development Mission
ans.b
Q9. Consider the following statements:
1. Most of India’s external debt is owed by governmental entities.
2. All of India’s external debt is denominated in US dollars.
Which of the statements given above is/are correct?
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
ans.d
Q10.Which of the following is not included in the assets of a commercial bank in India?
a) Advances
b) Deposits
c) Investments
d) Money at call and short notice
ans.b
Q11. In the context of India, which of the following factors is/are contributor/ contributors to reducing the risk of a currency crisis?
1. The foreign currency earnings of India’s IT sector
2. Increasing government expenditure
3. Remittances from Indians abroad
Select the correct answer using the code given below.
a) 1 only
b) 1 and 3 only
c) 2 only
d) 1, 2 and 3
ans.b
Q12. Which of the following is issued by registered foreign portfolio investors to overseas investors who want to be part of Indian stock market without registering themselves directly?
a) Certificate of Deposits
b) Commercial Paper
c) Promissory Note
d) Participatory Note
ans.d
Q13. Consider the following statements:
1. Purchasing Power Parity (PPP) exchange rates are calculated by comparing the prices of the same basket of goods and services in different countries
2. In terms of PPP dollars, India is the sixth largest economy in the world.
Which of the statement given above is/are correct?
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
ans.a
Q14. Among the agricultural commodities imported by India, which one of the following accounts for the highest imports in terms of value in the last five years?
a) Spices
b) Fresh fruits
c) Pulses
d) Vegetable oils
ans.d
Q15. Which one of the following is not the most likely measure the Government/ RBI takes
to stop the slide of Indian rupee?
a) Curbing imports of nonessential goods-and promoting exports
b) Encouraging Indian borrowers to issue rupee denominated Masala Bonds
c) Easing conditions relating to external commercial borrowing
d) Following an expansionary monetary policy
ans.d
Q16. The money multiplier in an economy increases with which one of the following?
a) Increase in the cash reserve ratio
b) Increase in the banking habit of the population
c) Increase in the statutory liquidity ratio
d) Increase in the population of the country
ans.b
Q17. The Global Competitiveness Report is published by the
a) International Monetary Fund
b) United Nations Conference on Trade and Development
c) World Economic Forum
d) World Bank
ans.c
Q18. Which one of the following best describes the term “Merchant Discount Rate” sometimes seen in news?
a) The incentive given by a bank to a merchant for accepting payments through debit cards pertaining to that bank.
b) The amount paid back by banks to their customers when they use debit cards for financial transactions for purchasing goods or services
c) The charge to a merchant by a bank for accepting payments from his customers through the bank’s debit cards
d) The incentive given by the Government to merchants for promoting digital payments by their customers through Point of Sale (PoS) machines and debit cards.
ans.c
Q19. Which one of the following links all the ATMs in India ?
a) Indian Banks’ Association
b) National Securities Depository Limited
c) National Payments Corporation of India
d) Reserve Bank of India
ans.c
Q20. Consider the following statements:
1.Capital Adequacy Ratio (CAR) is the amount that banks have to maintain in the form of their own funds to offset any loss that banks incur if any account-holders fail to repay dues.
2.CAR is decided by each individual bank.
Which of the statements given above is/are correct?
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
ans.a
Q21. India enacted The Geographical Indications of Goods (Registration and Protection) Act, 1999 in order to comply with the obligations to
(a) ILO
(b) IMF
(c) UNCTAD
(d) WTO
ans.d
Q22. Which one of the following statements correctly describes the meaning of legal tender money ?
(a) The money which is tendered in courts of law to defray the fee of legal cases
(b) The money which a creditor is under compulsion to accept in settlement of his claims
(c) The bank money in the form of cheques drafts, bills of exchange, etc.
(d) The metallic money in circulation in a country
ans.b
Q23. If a commodity is provided free to the public, by the Government, then
(a) the opportunity cost is zero.
(b) the opportunity cost is ignored
(c) the opportunity cost is transferred from the consumers of the product to the tax-paying public.
(d) the opportunity cost is transferred from the consumers of the. product to the Government.
ans.c
Q24. Increase in absolute and per capita real GNP do not connote a higher level of economic development, if
(a) industrial output fails to keep pace with agricultural output.
(b) agricultural output fails to keep pace with industrial output.
(c) poverty and unemployment increase
(d) imports grow faster than exports.
ans.c
Q25. Consider the following statements :
Human capital formation as a concept is better explained in terms of a process which enables
1. individuals of a country to accumulate more capital.
2. increasing the knowledge, skill levels and capacities of the people of the country.
3. accumulation of tangible wealth.
4. accumulation of intangible wealth.
Which of the statements given above is/are correct?
a) 1 and 2
b) 2 only
c) 2 and 4
d) 1, 3 and 4
ans.c
Q26. Despite being a high saving economy, capital formation may not result in significant increase in output due to
a) weak administrative machinery
b) illiterac
c) high population density
d) high capital-output ratio
ans.d
Q27. Consider the following statements:
1.The Reserve Bank of India manages and services Government of India Securities but not any State Government Securities.
2.Treasury bills are issued by the Government of India and there are no treasury bills issued by the State Governments.
3.Treasury bills offer are issued at a discount from the par value.
Which of the statements given above is/are correct?
a) 1 and 2 only
b) 3 only
c) 2 and 3 only
d) 1, 2 and 3
ans.c
Q28. With reference to solar power production in India, consider the following statements :
1. India is the third largest in the world in the manufacture of silicon wafers used in photovoltaic units.
2. The solar power tariffs are determined by the Solar Energy Corporation of India.
Which of the statements given above is/are correct ?
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
ans.d
Q29. With reference to the governance of public sector banking in India, consider the following statements:
1.Capital infusion into public sector banks by the Government of India has steadily increased in the last decade.
2.To put the public sector banks order, the merger of associate banks with the parent State Bank of India has been affected
Which of the statements given above is/are correct?
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
ans.b
Q30. Consider the following items:
1.Cereal grains hulled
2.Chicken eggs cooked
3.Fish processed and canned
4.Newspapers containing advertising material
Which of the above items is/are exempted under GST (Goods and Services Tax) ?
a) 1 only
b) 2 and 3 only
c) 1, 2 and 4 only
d) 1, 2, 3 and 4
ans.c
Q31. Which of the following has/have occurred in India after its liberalization of economic policies in 1991?
1. Share of agriculture in GDP increased enormously.
2. Share of India’s exports in world trade increased.
3. FDI inflows increased. 4. India’s foreign exchange reserves increased enormously.
Select the correct answer using the codes given below:
a) 1 and 4 only
b) 2, 3 and 4 only
c) 2 and 3 only
d) 1, 2, 3 and 4
ans. b
Q32. Consider the following statements:
1. National Payment Corporation of India (NPCI) helps in promoting the financial inclusion in the country.
2. NPCI has launched RuPay, a card payment scheme.
Which of the statements given above is/are correct?
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
ans.c
Q33. What is/are the most likely advantages of implementing ‘Goods and Services Tax (GST)’?
1. It will replace multiple taxes collected by multiple authorities and will thus create a single market in India.
2. It will drastically reduce the ‘Current Account Deficit’ of India and will enable it to increase its foreign exchange reserves.
3. It will enormously increase the growth and size of economy of India and will enable it to overtake China in the near future.
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
ans.a
Q34. Consider the following statements:
1. Tax revenue as a percent of GDP of India has steadily increased in the last decade.
2. Fiscal deficit as a percent of GDP of India has steadily increased in the last decade.
Which of the statements given above is/are correct?
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
ans.d
Q35. What is/are the advantage/advantages of implementing the ‘National Agriculture Market’ scheme?
1. It is a pan-India electronic trading portal for agricultural commodities.
2. It provides the farmers access to nationwide market, with prices commensurate with the quality of their produce.
Select the correct answer using the code given below:
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
ans.c
Q36. With reference to the ‘National Intellectual Property Rights Policy’, consider the following statements:
1. It reiterates India’s commitment to the Doha Development Agenda and the TRIPS Agreement.
2. Department of Industrial Policy and Promotion is the nodal agency for regulating intellectual property rights in India.
Which of the above statements is/are correct?
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
ans.c
Q37. What is the purpose of setting up of Small Finance Banks (SFBs) in India?
1. To supply credit to small business units
2. To supply credit to small and marginal farmers
3. To encourage young entrepreneurs to set up business particularly in rural areas.
Select the correct answer using the code given below:
a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
ans.a
Q38. Which of the following is a most likely consequence of implementing the ‘Unified Payments Interface (UPI)?
a) Mobile wallets will not be necessary for online payments.
b) Digital currency will totally replace the physical currency in about two decades.
c) FDI inflows will drastically increase.
d) Direct transfer of subsidies to poor people will become very effective.
ans.a
Q39. Which of the following statements is/are correct regarding the ‘Monetary Policy Committee (MPC)?
1. It decides the RBI’s benchmark interest rates.
2. It is a 12-member body including the Governor of RBI and is reconstituted every year.
3. It functions under the chairmanship of the Union Finance Minister.
Select the correct answer using the code given below:
a) 1 only
b) 1 and 2 only
c) 3 only
d) 2 and 3 only
ans.a
Q40. The term ‘Base Erosion and Profit Shifting’ is sometimes seen in the news in the context of
a) mining operation by multinational companies in resource-rich but backward areas
b) curbing of the tax evasion by multinational companies
c) exploitation of genetic resources of a country by multinational companies
d) lack of consideration of environmental costs in the planning and implementation of developmental projects
ans.a
Q41. With reference to ‘Bitcoins’, sometimes seen in the news, which of the following statements is/are correct?
1. Bitcoins are tracked by the Central Banks of the countries.
2. Anyone with a Bitcoin address can send and receive Bitcoins from anyone else with a Bitcoin address.
3. Online payments can be sent without either side knowing the identity of the other.
Select the correct answer using the code given below.
a) 1 and 2 only
b) 2 and 3 only
c) 3 only
d) 1, 2 and 3
ans.b
Q42. What is/are the purpose/purposes of Government’s ‘Sovereign Gold Bond Scheme’ and ‘Gold Monetization Scheme’?
1. To bring the idle gold lying with Indian households into the economy
2. To promote FDI in the gold and jewellery sector
3. To reduce India’s dependence on gold imports
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
ans.c
Q43. With reference to `IFC Masala Bonds’, sometimes seen in the news, which of the statements given below is/are correct?
1. The International Finance Corporation, which offers these bonds, is an arm of the World Bank.
2. They are the rupee-denominated bonds and are a source of debt financing for the public and private sector.
Select the correct answer using the code given below.
1 only
2 only
Both 1 and 2
Neither 1 nor 2
ans.c
Q44. 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?
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
ans.c
Q45. The establishment of ‘Payment Banks’ is being allowed in India to promote financial inclusion. Which of the following statements is/are correct in this context?
1. Mobile telephone companies and supermarket chains that are owned and controlled by residents are eligible to be promoters of Payment Banks.
2. Payment Banks can issue both credit cards and debit cards.
3. Payment Banks cannot undertake lending activities.
Select the correct answer using the code given below
a) 1 and 2 only
b) 1 and 3 only
c) 2 only
d) 1, 2 and 3
ans.b
Q46.With reference to ‘Financial Stability and Development Council’, consider the following statements :
1. It is an organ of NITI Aayog.
2. It is headed by the Union Finance Minister.
3. It monitors macroprudential supervision of the economy.
Which of the statements given above is/are correct?
a) 1 and 2 only
b) 3 only
c) 2 and 3 only
d) 1, 2 and 3
ans.c
Q47. Which of the following is/are included in the capital budget of the Government of India?
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
ans.d
Q48. The term ‘Core Banking Solutions’ is sometimes seen in the news. Which of the following statements best describes/describe this term?
1. It is a networking of a bank’s branches which enables customers to operate their accounts from any branch of the bank on its network regardless of where they open their accounts.
2. It is an effort to increase RBI’s control over commercial banks through computerization.
3. It is a detailed procedure by which a bank with huge non-performing assets is taken over by another bank.
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
ans.a
Q49. Which of the following best describes the term ‘import cover’, sometimes seen in the news?
a) It is the ratio of value of imports to the Gross Domestic Product of a country
b) It is the total value of imports of a country in a year
c) It is the ratio between the value of exports and that of imports between two countries
d) It is the number of months of imports that could be paid for by a country’s international reserves
ans.d
Q50. India’s ranking in the ‘Ease of Doing Business Index’ is sometimes seen in the news. Which of the following has declared that ranking?
a) Organization for Economic Cooperation and Development (OECD)
b) World Economic Forum
c) World Bank
d) World Trade Organization (WTO)
ans.c
Q51. A decrease in tax to GDP ratio of a country indicates which of the following?
1. Slowing economic growth rates
2. Less equitable distribution of national income
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
ans.b
Q52. Which one of the following issues the “Global Economic Prospects” report periodically?
a) The Asian Development Bank
b) The European Bank for Reconstruction and Development
c) The US Federal Reserve Bank
d) The World Bank
ans.d
Q53. When the Reserve Bank of India reduces the Statutory Liquidity by 50 basis points, which of the following is likely to happen?
a) India’s GDP growth rate increases drastically
b) Foreign Institutional Investors may bring more capital into our country
c) Scheduled Commercial Banks may cut their lending rates
d) It may drastically reduce the liquidity to the banking system.
ans.c
Q54. Which of the following brings out the ‘Consumer Price Index Number for the Industrial Workers’?
a) The Reserve Bank of India
b) The Department of Economic Affairs
c) The Labour Bureau
d) The department of Personnel and Training
ans.c
Q55. Convertibility of rupee implies:
a) being able to convert rupee notes into gold
b) allowing the value of rupee to be fixed by market forces
c) freely permitting the conversion of rupee to other currencies and vice versa
d) developing an international market for currencies in India
ans.c
Q56. Basel III Accord’ or simply ‘Basel III’, often seen in the news, seeks to
a) develop national strategies for the conservation and sustainable use of biological diversity
b) improve banking sector’s ability to deal with financial and economic stress and improve risk management
c) reduce the greenhouse gas emissions but places a heavier burden on developed countries
d) transfer technology from developed Countries to poor countries to enable them to replace the use of chlorofluorocarbons in refrigeration with harmless chemicals
ans.b
Q57. With reference to India economy, consider the following statements:
1.The rate of growth of real Gross Domestic Product has steadily increased in the last decade.
2.The Gross Domestic Product at market prices (in rupees) has steadily increased in the last decade
Which of the statement given above is/are correct?
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
ans.b
Q58. With reference to India economy, consider the following :
1.Bank rate
2.Open market operations
3.Public debt
4.Public revenue
Which of the above is/are component/components of Monetary Policy?
a) 1 only
b) 2, 3 and 4
c) 1 and 2
d) 1, 3 and 4
ans.c
Q59. Which reference to inflation in India, which of the following statements is correct?
a) Controlling the inflation in India is the responsibility of the Government of India only
b) The Reserve Bank of India has no role in controlling the inflation
c) Decreased money circulation helps in controlling the inflation
d) Increased money circulation helps in controlling the inflation
ans.c
Q60. The problem of international liquidity is related to the non-availability of
a) goods and services
b) gold and silver
c) dollars and other hard currencies
d) exportable surplus
ans.c
Q61.There has been a persistent deficit budget year after year. Which of the following actions can be taken by the government to reduce the deficit?
1. Reducing revenue expenditure
2. Introducing new welfare schemes
3. Rationalizing subsidies
4. Expanding industries
Select the correct answer using the code given below.
a) 1 and 3 only
b) 2 and 3 only
c) 1 only
d) 1, 2, 3 and 4
ans.a
Q62. With reference to the Indian Renewable Energy Development Agency Limited (IREDA), which of the following statements is/are correct?
1. It is a Public Limited Government Company.
2. It is a Non – Banking Financial Company.
Select the correct answer using the code given below.
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 or 2
ans.c
Q63. In India, markets in agricultural products are regulated under the
a) Essential Commodities Act, 1955
b) Agricultural Produce Market Committee Act enacted by States
c) Agricultural Produce (Grading and Marking) Act, 1937
d) Food Products Order, 1956 and Meat and Food Products Order, 1973
ans.b
Q64. Which of the following statements is/are correct regarding National Innovation Foundation-India (NIF)?
1.NIF is an autonomous body of the Department of Science and Technology under the Central Government
2.NIF is an initiative to strengthen the highly advanced scientific research in India’s premier scientific institutions in collaboration with highly advanced foreign scientific institutions.
Select the correct answer using the code given below.
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
ans.c
Q65. In India the steel production industry requires the import of
a) Saltpetre
b) rock phosphate
c) coking coal
d) All of the above
ans.c
Q66. What does venture capital mean?
a) A short-term capital provided to industries
b) A long-term start-up capital provided to new entrepreneurs
c) Funds provided to industries at times of incurring losses
d) Funds provided for replacement and renovation of industries
ans.b
Q67. The terms ‘Marginal Standing Facility Rate’ and ‘Net Demand and Time Liabilities’, sometimes appearing in news, are used in relation to
a) banking operations
b) communication networking
c) military strategies
d) supply and demand of agricultural products
ans.a
Q68. Which of the following organizations brings out the publication known as ‘World Economic Outlook’?
a) The International Monetary Fund
b) The United Nations Development Programme
c) The World Economic Forum
d) The World Bank
ans.a
Q69. 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
ans.c