Multiple Choice questions for Economics with answers Download PDF
Top-50 Economics Questions for all Competitive exams
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Economics Notes for SSC CGL in English
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Economics Notes & 50 Questions for SSC CGL Tier 1 / 2 Exam
1. Who is called the ‘Father of Economics’?
(a) Max Muller
(b) Karl Marx
(c) Adam Smith
(d) None of these
Answers : -(c) Adam Smith
2. India has:
(a) Socialistic economy
(b) Gandhian economy
(c) Mixed economy
(d) Free economy
Answers: - (c) Mixed economy
3. India opted for ‘Mixed Economy’ in:
(a) Framing of the Constitution
(b) Second Five Year Plan
(c) Industrial Policy of 1948
(d) none of these
Answers: - (b) Second Five Year Plan (1956-1961)
4. ‘Mixed Economy’ means :
(a) co-existence of small scale and large scale industries
(b) co-existence of the rich and the poor
(c) co-existence of private and public sector
(d) assigning equal importance to both agriculture and heavy industries
Answers: - (c) co-existence of private and public sector
5. Who wrote the book ‘Planned Economy for India’?
(a) M. Visvesvaraya
(b) Sardar Vallabhbhai Patel
(c) Jawaharlal Nehru
(d) Mahatma Gandhi
Answers: - (a) M. Visvesvaraya in 1934
6. National Development Council was set up in :
(a) 1948
(b) 1950
(c) 1951
(d) 1952
Answers: - (d) 1952
7. Economic Planning is a subject:
(a) in the Union List
(b) in the State List
(c) in the Concurrent List
(d) Unspecified in any special list
Answers: - (c) in the Concurrent List
8. The Planning Commission is :
(a) a Ministry
(b) a Government department
(c) an Advisory body
(d) an Autonomous Corporation
Answers: - (c) an Advisory body established in 1950 constituted by advisory body of 1946 chaired by KC Neogi. Thus it is not a statuary or constitutional body. First chairman Pandit Jawaharlal Nehru.
9. Planning in India derives its objectives from:
(a) Fundamental Rights
(b) Directive Principles of State policy
(c) Fundamental Duties
(d) Preamble
Answers : - (b) Directive Principles of State policy
10. Economic survey is published by:
(a) Ministry of Finance
(b) Planning Commission
(c) Govt, of India
(d) Indian Statistical Institute
Answers : - (a) Ministry of Finance before presenting the union budget every year.for the performance of the previous budget.
11. Dadabhai Naoroji theorised on the ‘drain of wealt’h from India in his book:
(a) Poverty under British Rule in India
(b) Poverty in British Rule in India
(c) Poverty and Un-British Rule in India
(d) Poverty of Economic Drain in British India
Answers : - (c) Poverty and Un-British Rule in India published in 1901.
12. The deputy chairman of the Planning Commission:
(a) is the Prime Minister
(b) is the Planning Minister
(c) holds the rank of a cabinet minister
(d) is an economist of repute
Answers: - (c) holds the rank of a cabinet minister
13. The Planning Commission of India :
I. was set up in 1950
II. is a constitutional body
III. is an advisory body
IV. is a government department
(a) I and II
(b) II and III
(c) I and III
(d) III only
Answers: - (c) I and III
14. Microeconomics is concerned with :
1. behaviour of industrial decision-makers
2. the level of employment
3. changes in the general level of prices
4. determination of prices of goods and services
(a) 1 and 2
(b) 2 and 3
(c) 3 and 4
(d) 1 and 4
Answers: - (d) 1 and 4
15. The first attempt to initiate economic planning in India was made by :
(a) Balwantrai Mehta
(b) Vallabhbhai Patel
(c) M. Visvesvaraya
(d) Jawaharlal Nehru
Answers : - (c) M. Visvesvaraya
16. In which Plan was the growth rate target exceeded?
(a) First
(b) Fifth
(c) Sixth
(d) In none
Answers : - (a) First
17. Put in chronological order the following special features/objectives of different Five Year Plans as they were first formulated :
1. Mahalanobis strategy
2. Modernisation
3. Removal of Poverty
4. Emphasis on employment generation
(a) 1, 2, 3, 4
(b) 2, 1, 3, 4
(c) 1, 3, 2, 4
(d) 3, 4, 1, 2
Answers : - (c) 1, 3, 2, 4
18. In India, the concepts of “minimum needs” and “directed anti-poverty programmes” were the innovations of :
(a) Fourth Five-year Plan
(b) Fifth Five-year Plan
(c) Sixth Five-year Plan
(d) Seventh Five-year Plan
Answers : - (b) Fifth Five-year Plan, It was when slogan of ‘Garibi hatao’ was given to remove poverty.
19. The strategy of Rolling plan was adopted during the Prime Ministership of :
(a) Lal Bahadur Shastri
(b) Indira Gandhi
(c) Morarji Desai
(d) Rajiv Gandhi
Answers : - (c) Morarji Desai
20. The Second Five Year Plan laid more stress upon :
(a) agriculture
(b) industrialisation
(c) removing poverty
(d) self-reliance
Answers: - (b) industrialization
21. The steel plants at Durgapur, Bhilai and Rourkela were established during the period of :
(a) First Five Year Plan
(b) Second Five Year Plan
(c) Third Five Year Plan
(d) Fourth Five Year Plan
Answers : - (b) Second Five Year Plan
22. What is the correct sequence of the following strategies used for Five Year Plans in India?
1. Balanced growth
2. Rehabilitation of the economy
3. Industrial development
(a) 1, 3, 2
(b) 2, 1, 3
(c) 2, 3, 1
(d) 3, 2, 1
Answers : - (c) 2, 3, 1
23. A higher international interest rate will _______________ FDI.
A. Increase
B. Have no effect on
C. Decrease
D. Stabilize
Answer: C. Decrease
Explanation:
When international interest rates rise, it becomes more expensive to borrow money, which can discourage Foreign Direct Investment (FDI). Investors may prefer safer financial instruments over investing in foreign businesses.
24. Which of the following groups suffer the most from inflation?
A. Debtors
B. Creditors
C. Businessmen
D. Investors in real estate
Answer: B. Creditors
Explanation:
Creditors (those who lend money) suffer the most during inflation because the money they are repaid has less purchasing power than when it was lent. On the other hand, debtors benefit as they repay loans with money that is worth less.
25. The average variable cost curve is __________ shaped.
A. L-shaped
B. U-shaped
C. V-shaped
D. Straight line
Answer: B. U-shaped
Explanation:
The Average Variable Cost (AVC) curve is typically U-shaped due to the law of variable proportions. Initially, AVC decreases as output increases due to increasing returns, but after a point, it starts rising due to diminishing returns.
Economics Questions MCQ Practice SSC CGL with Answers
26. When was the Human Development Index (HDI) introduced, and by whom?
A. 1990, by Mahbub ul Haq
B. 1985, by Amartya Sen
C. 1995, by United Nations
D. 1992, by World Bank
Answer: A. 1990, by Mahbub ul Haq
Explanation:
The Human Development Index (HDI) was introduced in 1990 by Pakistani economist Mahbub ul Haq, in collaboration with Indian economist Amartya Sen, under the United Nations Development Programme (UNDP). It measures a country's average achievements in health, education, and income.
27. The incidence of sales tax falls on:
A) Consumers
B) Wholesale dealers
C) Retail dealers
D) Producers
Correct Answer: A) Consumers
Explanation:
Although sales tax is collected by sellers (wholesale or retail), the actual burden of the tax is passed on to consumers through increased prices. Hence, the incidence (final burden) of sales tax falls on consumers.
28. Who among the following has suggested a tax on expenditure?
A. Adam Smith
B. Alfred Marshall
C. Nicholas Kaldor
D. J.M. Keynes
Answer: C. Nicholas Kaldor
Explanation:
Nicholas Kaldor, a noted British economist, proposed the idea of an expenditure tax as an alternative to income tax. He believed that taxing consumption rather than income would promote savings and investment, leading to economic growth.
29. WTO basically promotes which of the following?
A. Bilateral trade
B. Regional trade
C. Multilateral trade
D. Domestic trade
Answer: C. Multilateral trade
Explanation:
The World Trade Organization (WTO) primarily promotes multilateral trade, which involves trade agreements and cooperation among multiple countries to ensure free and fair international trade.
30. Deficit financing is an instrument of:
A. Monetary policy
B. Credit policy
C. Fiscal policy
D. Tax policy
Answer: C. Fiscal policy
Explanation:
Deficit financing refers to the method of funding government spending by borrowing rather than through taxation or revenue generation. It is a key tool of fiscal policy, used to stimulate economic growth, especially during a recession.
31. The ‘Interest Rate Policy’ is a component of:
A. Fiscal Policy
B. Monetary Policy
C. Trade Policy
D. Direct Control
Answer: B. Monetary Policy
Explanation:
The Interest Rate Policy is a major component of Monetary Policy, which is managed by a country’s central bank (like the RBI in India). It involves regulating the money supply and controlling inflation by adjusting interest rates.
32. Which of the following is not an assumption of perfect competition?
A. Many firms
B. Many buyers
C. Restrictions on entry into the market
D. Each firm sells an identical product
Answer: C. Restrictions on entry into the market
Explanation:
In a perfectly competitive market, one key assumption is free entry and exit of firms. Therefore, restrictions on entry go against the concept of perfect competition. The other options are valid assumptions of a perfectly competitive market.
33. Which of the following is not an assumption of perfect competition?
A. There are many sellers and many buyers
B. the average total costs continually decrease
C. the good sold by all sellers the market is assumed to be homogenous.
D. Buyers and sellers in the market are assumed to have perfect information.
Answer: B. The average total costs continually decrease
Explanation:
In perfect competition, there is no assumption that average total costs must continually decrease. The other options (many buyers and sellers, homogenous goods, and perfect information) are core assumptions of perfect competition.
34. Price theory is also known as:
A. Demand theory
B. Cost theory
C. Micro economics
D. Macro economics
Answer: C. Microeconomics
Explanation:
Price theory is also known as microeconomics, which focuses on the behavior of individual consumers and firms in the market. It analyzes how prices are determined in the market and how resources are allocated.
35. National Income is:
A. The sum of total production of goods and services
B. The total value of all goods and services produced by a country’s residents
C. The income received by all firms
D. The total amount of money a country’s government spends in a year
Answer: B. The total value of all goods and services produced by a country’s residents
Explanation:
National Income refers to the total monetary value of all goods and services produced by the residents of a country in a given period. It includes income from both domestic and foreign sources but excludes income earned by foreign residents.
36. Disinvestment in Public Sector is called:
A. Liberalisation
B. Globalisation
C. Industrialisation
D. Privatisation
Answer: D. Privatisation
Explanation:
Disinvestment in the Public Sector refers to the process of reducing government ownership in public sector enterprises, often by selling shares to private investors. This is commonly known as privatisation.
37. Which is the first nationalized bank in India?
A. State Bank of India
B. Reserve Bank of India
C. Punjab National Bank
D. Bank of India
Answer: B. Reserve Bank of India
Explanation:
The Reserve Bank of India (RBI) was nationalized on January 1, 1949, making it the first nationalized bank in India, even before the country attained independence. It was brought under government control to ensure it could act as the central banking institution for the country.
38. FERA in India has been replaced by __________.
A. FEMA
B. RBI Act
C. SEBI Act
D. Economic Reforms Act
Answer: A. FEMA
Explanation:
FERA (Foreign Exchange Regulation Act) was replaced by FEMA (Foreign Exchange Management Act) in 1999. FEMA was introduced to facilitate external trade and payments and to promote the orderly development and maintenance of the foreign exchange market in India.
39. What is the limit for current account transactions under FEMA for individuals and others per financial year?
A. USD 1,00,000
B. USD 2,50,000
C. USD 5,00,000
D. No limit
Answer: B. USD 2,50,000
Explanation:
Under the Foreign Exchange Management Act (FEMA), the limit for current account transactions for individuals and others is set at USD 2,50,000 per financial year. This applies to both repatriation and remittance for personal, business, and other purposes.
40. On which date were 14 major banks in India nationalized?
A. January 1, 1949
B. July 19, 1969
C. August 15, 1947
D. April 1, 1980
Answer: B. July 19, 1969
Explanation:
On July 19, 1969, Indira Gandhi, the Prime Minister of India, nationalized 14 major banks to ensure that banking services were more accessible to the general public and to serve the needs of the country's economy. This was a pivotal step in the expansion of the public sector in India.
41. The exchange of commodities between two countries is referred to as:
A. Balance of trade
B. Bilateral trade
C. Volume of trade
D. Multilateral trade
Answer: C. Volume of trade
Explanation:
Volume of trade refers to the total quantity or value of goods exchanged between countries, irrespective of the specific nature of the trade. When talking about the total exchange of commodities between two countries, this is commonly referred to as the volume of trade, which encompasses both bilateral and multilateral exchanges.
42. If inflation is higher in Country A than in Country B, and the exchange rate between the two countries is fixed, what is likely to happen to the trade balance between the two countries?
A. Country A will experience an improvement in its trade balance
B. Country B will experience an improvement in its trade balance
C. The trade balance will remain unchanged
D. Both countries will experience a decline in trade balance
Answer: B. Country B will experience an improvement in its trade balance
Explanation:
If inflation is higher in Country A than in Country B, the goods in Country A become relatively more expensive compared to those in Country B, even though the exchange rate is fixed. This makes Country A’s exports less competitive and Country B’s exports more competitive, improving Country B's trade balance.
43. A want becomes a demand only when it is backed by the:
A. Desire to buy
B. Necessity to buy
C. Ability to purchase
D. Utility of the product.
Answer: D. Utility of the product
Explanation:
A want becomes a demand when it is backed by the utility of the product. The utility refers to the satisfaction or benefit derived from consuming a product. Even if a person desires something, it only becomes a demand when the product provides utility and is seen as useful or valuable.
44. Which is the biggest tax-paying sector in India?
A. Industrial
B. Agricultural
C. Service
D. Construction
Answer: A. Industrial
Explanation:
The industrial sector is the biggest tax-paying sector in India. It contributes significantly to the country's revenue through corporate taxes, excise duties, and various other forms of taxation. Industries like manufacturing, construction, and mining are major contributors.
45. New capital issue occurs in which of the following?
A. Primary Market
B. Secondary Market
C. Commodity Market
D. Tertiary Market
Answer: A. Primary Market
Explanation:
New capital issues occur in the Primary Market where companies issue new stocks or bonds to the public for the first time, raising capital directly from investors. This is where initial public offerings (IPOs) and other capital raising activities take place.
46. When there is an official change in the exchange rate of domestic currency, it is called:
A. Devaluation
B. Revaluation
C. Appreciation
D. Depreciation
Answer: B. Revaluation
Explanation:
Revaluation refers to the official increase in the value of a country's currency relative to other currencies. It happens when a country decides to raise the value of its domestic currency in a fixed exchange rate system, often due to economic policies or favorable trade conditions.
48. Inflation redistributes income and wealth in favour of which class?
A. Poor class
B. Pensioners
C. Middle class
D. Rich class
Answer: D. Rich class
Explanation:
Inflation tends to redistribute income and wealth in favor of the rich class because they typically own assets like property, stocks, or businesses that can increase in value during inflation. The rich are also more likely to have their income linked to investments or other inflation-protected assets, which helps them preserve or increase their wealth. In contrast, those with fixed incomes, like pensioners or middle-income groups, often struggle during inflation.
49. Demand for a commodity refers to:
A. Desire for that commodity
B. Need for that commodity
C. Quantity demanded of that commodity
D. Quantity demanded at a certain price during any particular period of time
Answer: D. Quantity demanded at a certain price during any particular period of time
Explanation:
Demand refers to the quantity of a commodity that consumers are willing and able to purchase at a specific price during a given period of time. It’s not just a desire or need but a concrete demand that includes both the willingness and ability to pay for a product.
50. Which of the following are the main causes of the slow rate of growth of per capita income in India?
1. High capital-output ratio
2. High rate of growth of population
3. High rate of capital formation
4. High level of fiscal deficit
A. 1 and 2
B. 2, 3, and 4
C. 1 and 4
D. 1, 2, and 4
Answer: A. 1, 2 and 4
Explanation:
The slow rate of growth of per capita income in India is primarily caused by:
High capital-output ratio (1), which means that more capital is needed to produce each unit of output, limiting the efficiency of growth.
High rate of growth of population (2), which outpaces the growth of income, diluting the benefits of increased output and income.
These factors contribute more significantly to the slow growth than the other factors listed.
51. In India, rural incomes are generally lower than urban incomes. Which of the following reasons account for this?
1. A large number of farmers are illiterate and know little about scientific agriculture
2. Prices of primary products are lower than those of manufactured products
3. Investment in agriculture has been low when compared to investment in industry
Codes:
A. 1, 2, and 3
B. 1 and 3
C. 1 and 3
D. 2 and 3
Answer: A. 1, 2, and 3
Explanation:
Rural incomes are generally lower due to multiple factors:
• Illiteracy among farmers (1) limits their knowledge and adoption of advanced farming techniques, reducing productivity.
• Lower prices for primary products (2) compared to manufactured goods lead to lower income from agriculture.
• Low investment in agriculture (3) as compared to industry, which means there are fewer advancements or improvements in rural economies, keeping their incomes lower.
52. The Indian Economy is characterized by:
1. Pre-dominance of Agriculture
2. Pre-dominance of Industry
3. Low Per Capita Income
4. Massive Unemployment
Codes:
A. 1 and 2 only
B. 1, 2, and 3 only
C. 2, 3, and 4 only
D. 1, 3, and 4 only
Answer: D. 1, 3, and 4 only
Explanation:
Pre-dominance of Agriculture (1): The Indian economy is still largely agrarian, with a significant portion of the population engaged in agriculture.
Low Per Capita Income (3): Despite growth, India has a relatively low per capita income, indicative of challenges in equitable economic development.
Massive Unemployment (4): Unemployment remains a significant issue in India, particularly in rural areas and among the youth.
India’s economy is not characterized by pre-dominance of Industry (2), as the industrial sector is still smaller in comparison to agriculture, even though it has been growing.
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