Economy MCQ Quiz - Objective Question with Answer for Economy - Download Free PDF

The correct answer is Repo Rate.

Key Points

• Repo rate is the rate at which the central bank of a country (Reserve Bank of India in case of India) lends money to commercial banks in the event of any shortfall of funds.
• Repo rate is used by monetary authorities to control inflation.
• Current Repo Rate: 6.5% (June 2024 MPC))
• It is a rate on short-term, collateral-backed borrowing.

Additional Information

• Reverse Repo rate is the rate at which the Reserve Bank of India borrows funds from the commercial banks in the country.
• The bank rate is the rate of interest that is charged by a central bank while lending loans to a commercial bank.
• In the event of a fund deficiency, a bank can borrow money from the central bank of a country. 
• Cash reserve ratio or CRR is a part of the RBI's monetary policy, which helps eliminate liquidity risk and regulate the money supply in the economy.

The correct answer is P.C. Mahalanobis.

Important Points

• P.C. Mahalanobis:
  • He is considered the father of modern statistics in India.
  • He founded the Indian Statistical Institute.
  • He is also known as the Architect of Indian Planning.
  • Mahalanobis's model of the second five-year plan focused on Rapid industrialization and strengthening the public sector.

Additional Information

• K.N. Raj:
  • He was one of the architects of the First Five Year Plan in India.
  • He also served as an economic adviser to Prime Ministers from Nehru to P.V. Narasimha Rao.
  • A committee on taxation on agricultural wealth and income was appointed by the central government under the chairmanship of Dr. K.N. Raj in February 1972.
• Sukhamoy Chakravarty:
  • He was also a key architect of the Five-Year plans of India.
  • The Sukhamoy Chakravarty Committee was formed in December 1982 to assess the functioning of the Indian Monetary system.
• John Matthai:
  • He served as India's first Railway Minister.
  • He was the first Chairman of the State Bank of India when it was set up in 1955. 

The correct answer is 1991.

Key Points

• The New Economic Policy, often referred to as the Economic Liberalisation in India, was introduced in 1991.
• Faced with a major economic crisis, the government of India, led by then Prime Minister P.V. Narasimha Rao and Finance Minister Dr. Manmohan Singh, decided to introduce radical changes in India's economic policy.
• The policy aimed at making the Indian economy market-oriented and expanding the role of private and foreign investment.
• Specific changes included reducing import tariffs, decreasing taxes, opening up to foreign investment, and deregulating markets within the country to promote competition.

Additional Information

• 1992: The Securities and Exchange Board of India (SEBI) was given statutory recognition in this year.
• 1992: The Harshad Mehta scam which led to major changes in Indian Stock Market took place this year.
• 1990: The economy was under socialist-inspired policies, regulatory restrictions, and extensive protectionism, which was soon to change in the next year with the introduction of the New Economic Policies.

The correct answer is Rs. 200.

Key Points

• Sanchi Stupa has been designed on the page side of Rs. 200 Indian bank notes.
• The Sanchi Stupa motif is a feature in the new Rs 200 note.
  • ​Sanchi is a Buddhist complex, famous for its Great Stupa, on a hilltop at Sanchi Town in Raisen District of the State of Madhya Pradesh.
  • The Great Stupa at Sanchi is one of the oldest stone structures in India and was originally commissioned by the emperor Ashoka in the 3rd century BCE.
  • Sanchi was also her birthplace as well as the venue of her and Ashoka's wedding.

Additional Information

• Rs 50 note is fluorescent blue in colour.
  • The note has geometric patterns on both sides and is comparatively smaller in size.
  • On the reverse Rs, 50 note has the ‘Hampi with Chariot’ motif at the back.
• Rs 500:
  • The new note has shades of green and is smaller in size as compared to the note of the previous series.
  • The figure on the note is written in Devnagri.
  • On the reverse side of Rs 500 note is the image of the historical Red Fort building.
• Rs 2,000:
  • ​The new Rs 2,000 note is pink in colour, is slightly bigger than Rs 500 note.
  • Both the Rs 500 and Rs 2,000 note has the Swachh Bharat logo on the note.
  • The Reverse side of Rs 2000 note has an image of Mangalyaan representing India's first interplanetary space mission.

The correct answer is Custom Duty.

Key Points

• Custom Duty tax is not included in Goods and Services Tax (GST).
• Customs duty refers to the tax imposed on goods when they are transported across international borders.
  • In simple terms, it is the tax that is levied on the import and export of goods.
• The government uses this duty to raise its revenues, safeguard domestic industries, and regulate the movement of goods.
  • Customs duty is a form of indirect tax which is imposed at the time of both import and export of goods and services.
  • The tax which is imposed on the import of goods and services are is known as Import duty and for export of goods and services are known as Export duty.
• Hence, option 2 is correct. 

Additional Information

• Goods and services are divided into five different tax slabs for collection of tax - 0%, 5%, 12%, 18% and 28%.
  • However, petroleum products, alcoholic drinks, and electricity are not taxed under GST and instead are taxed separately by the individual state governments, as per the previous tax system. 
• Excise Duty :
  • Excise duty is a form of tax imposed on goods for their production, licensing and sale.
  • Today, excise duty applies only to petroleum and liquor.
  • Excise duty was levied on manufactured goods and levied at the time of removal of goods, while GST is levied on the supply of goods and services.
• Value Added Tax :
  • Value-added tax (VAT) is a type of indirect tax levied on goods and services for value-added at every point of production or distribution cycle, starting from raw materials and going all the way to the final retail purchase.
  • Because the consumer bears the entire tax, VAT is also a consumption tax.
• Service Tax :
  • Service tax is a tax levied by the government on service providers on certain service transactions but is actually borne by the customers.
  • It is categorized under Indirect Tax and came into existence under the Finance Act, 1994.
  • This tax is not applicable in the state of Jammu & Kashmir.

The correct answer is Russia.

Key Points

• The constitution of India has borrowed most of its provisions from the constitution of different countries in the world.
• According to Dr B R Ambedkar, the constitution of India has been framed after ransacking all the known constitutions of the world.
• The important provisions borrowed from Russia are:
  • Five-year plan.
  • Fundamental duties.

Additional Information

• The important provisions borrowed from Britain are:
  • Parliamentary form of government
  • Rule of Law.
  • Single Citizenship.
  • Office of Comptroller and Auditor General of India.
  • Bicameralism.
  • Writs.
• The important provisions borrowed from the United States are:
  • Fundamental rights.
  • Preamble.
  • Independence of judiciary.
  • Judicial review.
  • Impeachment.
  • Post of vice-president.
• The important provisions borrowed from Germany:
  • Suspension of Fundamental Rights during the emergency.

The correct answer is Horticulture and Honey.

Key Points

• The Golden Revolution is related to Horticulture and Honey.
• It started in 1991 and lasted till 2003.
• Father of Golden Revolution: Nirpakh Tutaj.
• The Golden Fibre Revolution is related to Jute Production.

Additional Information

The correct answer is Second Five Year Plan.

Key Points

• Second Five-year plan (1956 to 1961)
  • The second plan was conceived in an atmosphere of economic stability.
  • It was felt agriculture could be accorded lower priority. 
  • Industries got more importance in the 2nd five-year plan. The focus was mainly on heavy industries. 
  • The Indian government boosted the manufacturing of industrial goods in the country.
  • This was done primarily to develop the public sector.
  • The Plan Focussed on rapid industrialization- heavy & basic industries.
  • Advocated huge imports through foreign loans.
  • Therefore, the Indian Government adopted a mixed economy during the second five-year plan. Hence, Option 2 is correct.
  • The Industrial Policy 1956 was based on the establishment of a socialistic pattern of society as the goal of economic policy.
  • Acute shortage of forex led to pruning of development targets, the price rise was also seen ( about 30%) vis a vis decline in the earlier Plan & the 2nd FYP was only moderately successful.

Important Points

• The 2nd year five-year plan functioned based on the Mahalanobis model. 
• The Mahalanobis model was propounded by the famous Prasanta Chandra Mahalanobis in the year 1953.
• As many as five steel plants including the ones in Durgapur, Rourkela ,Bhilai were set up as per the 2nd five-year plan. 
• During the term of the 2nd five-year plan, Atomic Energy Commission came into being.
• The Commission was established in the year 1957. 
• During the same period, the Tata Institute of Fundamental Research was born.

Additional Information

• First Five Year Plan:
  • It was launched from 1951 to 1956, under the leadership of Jawaharlal Nehru. 
  • It was based on the Harrod-Domar model with a few modifications. 
  • Its main focus was on the agricultural development of the country.
  • This plan was successful and achieved a growth rate of 3.6% (more than its target of 2.1%). 
  • At the end of this plan, five IITs were set up in the country. 
• Third Five Year Plan:
  • It was made from 1961 to 1966.
  • It is also called ‘Gadgil Yojna’, after the Deputy Chairman of Planning Commission D.R. Gadgil.
  • The target of this plan was to make the economy independent.
  • The stress was laid on agriculture and the improvement in the production of wheat. 
  • India was engaged in two wars: (1) the Sino-India war of 1962 and (2) the Indo-Pakistani war of 1965. These wars exposed the weakness in our economy and shifted the focus to the defense industry, the Indian Army, and the stabilization of the price (India witnessed inflation). 
  • The plan was a flop due to wars and drought. The target growth was 5.6% while the achieved growth was 2.4%. 
• Fourth Five Year Plan:
  • Its duration was from 1969 to 1974, under the leadership of Indira Gandhi. 
  • The two main objectives of this plan i.e. growth with stability and progressive achievement of self-reliance.
  • Fourteen major Indian banks were nationalized.
  • Indo-Pakistani War of 1971 and the Bangladesh Liberation War took place. 
  • Implementation of Family Planning Programmes was amongst major targets of the Plan
  • It failed and could achieve a growth rate of 3.3% only against the target of 5.7%.

The correct answer is Primary sector.

Key Points:

• Activities that generate income are termed as economic activities.
• On the basis of economic activities, the Indian economy can be divided into 3 major sectors that are the primary sector, the secondary sector, and the tertiary sector.
• Dairy comes under the primary sector.
• Primary sector: Primary activities are directly dependent on the environment as these refer to the utilization of the earth’s resources. It, thus includes hunting and gathering, pastoral activities, fishing, apiculture, etc.
• Secondary sector: Secondary activities add value to natural resources by transforming raw materials into valuable products. Therefore, they are concerned with manufacturing, processing and construction industries. For eg: Shoe factory.
• Tertiary sector: Tertiary activities include both production and exchange. The production involves the ‘provision’ of services that are consumed. The exchange involves trade, transport and communication facilities that are used to overcome distance. For eg: Consultancy.

The correct answer is option 4 i.e 1950.

Key Points

• The Planning Commission was an institution which formulated Five-Year Plans in India.
  • Planning Commission set up in 1950.
  • Planning commission was established based on the recommendation of an advisory planning board under the chairmanship of KC Neogy.
  • Headquarters: Yojana Bhavan, New Delhi.
  • Planning commission is only an advisory body.
  • The concept of planning was based on the Russian model introduced by Joseph Stalin.
  • The Prime Minister is the chairman of the planning commission.
  • Jawaharlal Nehru was the first chairman of the planning commission.
  • Deputy chairman of the planning commission was appointed by the Union Cabinet.
  • Gulzarilal Nanda was the first deputy Chairman of the Planning Commission.
• Narendra Modi government dissolved the Planning Commission in 2014.
• The planning commission was replaced by the newly formed NITI Aayog in 2015.

The correct answer is 1956-61.

Key Points

• 1956-61 was the duration of the Second Five Year Plan.
• The Second Five Year Plan was based on Mahalanobis Model.
• ​Its main focus was on the industrial development of the country.
• P. C. Mahalanobis was a famous Indian statistician who founded the Indian Statistical Institute.
• The plan lagged behind the target growth rate of 4.5% and achieved a growth rate of 4.27%.

Additional Information

• The five-year plans were one of the central plans.
• The plans were formulated and were financed by the central government.
• These were launched in 1951, with the first five-year plans covering the years 1951-56.
• There were three breaks in five-year plans during 1966-69, 1978-80, and 1991-92.
• "Twelfth Five Year Plan" duration is from 2012 to 2017, and it was under the leadership of Manmohan Singh.
• It was the last five-year plan because Niti Aayog replaced it with the planning commission.
• Its main theme was “Faster, More Inclusive and Sustainable Growth”.
• Its growth rate target was 8%.​

​

The correct answer is Third five year plan.

Key Points

• The third Five Year Plan was launched from 1961-1966 under the leadership of Pandit Jawaharlal Nehru.
  • The Deputy Chairman of the Planning commission at the time of the third five-year plan was D. R. Gadgil.
  • The plan was also known as the Gadgil Yojana.
  • The independent economy (establishment of a self-reliant and self-generating economy), agriculture, and improvement in the production of wheat were the major objectives of the plan.
  • The third Five Year Plan was affected due to drought and two wars (Sino-India war of 1962 and Indo-Pakistani war of 1965).

Additional Information

• The First five-year plan 
  • This plan was launched from 1951-1956 under the leadership of Pandit Jawaharlal Nehru.
  • It was based on the Harrod-Domar model.
  • The targeted growth rate of the plan was 2.1%.
  • The plan was successful and achieved a growth rate of 3.6% which was more than its target.
  • The agricultural development of the country was the major objective of the plan.
  • At the end of this plan, five IITs were set up in the country.
• The second five-year plan
  • ​​​This plan is based on P.C Mahalanobis Model.
  • It was planned from 1 April 1956 to 31 March 1961.
  • It is popularly known as Mahalanobis Plan.
  • The second five-year plan accords high priority to industrialization, and especially to the development of basic and heavy industries.
  • This plan includes substantial investment in iron and steel, coal and Heavy engineering, Machine building, Heavy chemicals, and Cement Industries.​
• ​Fourth-Five year Plan:
  • ​The duration of this Plan is 1969-1974 under the leadership of Indira Gandhi.
  • The two main objectives of this Plan are growth with Stability and Progressive achievement with self-reliance.
  • During this Plan, 14 major Indian Banks were nationalized.
  • At this time, the Indo-Pak war of 1971 and the Bangladesh liberation war took Place.
  • The main emphasis was on the growth rate of agriculture to enable other sectors to move forward.
  • First, two years of the plan saw record production.
  • The last three years did not measure up due to poor monsoon.
  • Implementation of Family Planning Programmes was amongst the major targets of the Plan.

Important Points

The correct answer is Custom duties.

Important Points

• The tax imposed on the import and export of commodities is called Custom duties.
• This is a form of foreign trade control and a policy that taxes foreign goods to encourage or protect domestic industry.
• Tariffs may be set (a constant sum per unit of imported goods or a percentage of the price) or variable (the amount varies by price). Import taxation means that consumers are less likely to purchase them because they are more costly.
• An excise tax is an indirect tax on the sale of a particular good or service charged by the Government.
• A VAT (Value-added tax) is a consumption tax that is imposed on a product whenever a value is added at each stage of the supply chain, from production to point of sale.
• Goods and Services Tax(GST) is an Indirect tax on the purchase of goods and services used in India.

The correct answer is Ellora Caves.

Key Points

• In April 2019, RBI issued new Rs. 20 currency notes in the Mahatma Gandhi (New) series. 
• The new Rs 20 notes have the signature of the Reserve Bank's Governor.
• The base colour of the new note is Greenish Yellow.
• The new (Rs 20) denomination has the motif of Ellora Caves on the reverse side of the note.
• The dimension of the banknote will be 63 mm x 129 mm.

Additional Information

The correct answer is agricultural sector.

Key Points

• The First Five Year Plan in India was active between 1951 and 1956.
• The plan was based on the Harrod-Domar model.
• This plan gave priority to the agricultural sector of the country.
• The First Five Year Plan was presented before the parliament by Jawaharlal Nehru.
• Gulzarilal Nanda was the first Deputy Chairman of the Planning Commission of India.
• Economist K N Raj is known as the architect of this plan.
• It was quasi-successful for the government.
• The target growth rate of the First Five Year Plan was 2.1% annual gross domestic product (GDP) growth.

Additional Information

• The second Five Year Plan gave priority to the Industrial development of the country.