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

The decadal growth rate is a vital part of Census operations. This gives an overview of the percentage of total population growth in a particular decade. India showed a decadal growth rate of 17.64 % for 2011. The state of Bihar showed the highest decadal growth rate in between the years 2001 to 2011 with an increase of 25.10% in population.

The correct answer is Rajahmundry.

Key Points

• In India, Tobacco was introduced by the Portuguese.
• Virginia tobacco is maximumly used in India.
• The maximum production of tobacco in India is in Gujarat.
• The research centre of tobacco is located in Rajahmundry, Andhra Pradesh.
• In the world maximum production of tobacco is done by China.

Additional Information

• Every year, World No Tobacco Day is observed on 31 May.
• The theme of the World no Tobacco Day 2023 is "We need food, not tobacco".
• The Chief Minister of Andhra Pradesh is N. Chandrababu Naidu
• The Governor of Andhra Pradesh is Sri S. Abdul Nazeer.
• The capital of Andhra Pradesh is Amaravati.

The correct answer is Adam Smith.

Key Points

• Adam Smith is known as the father of Modern Economics.
• His work explains the concepts of the mechanics of morality, markets, and capitalism within an industrialized society.
• Self-interest, competition, supply and demand, and the relationship of labour in a free market are described in his book Wealth of Nations. 

Additional Information

• P. C. Ray -
  • ​Prafulla Chandra Ray is Known as the “Father of Indian Chemistry”.
  • He was a well-known Indian scientist and teacher and one of the first “modern” Indian chemical researchers.
  • He discovered the stable compound mercurous nitrite in 1896.
  • He established Bengal Chemical and Pharmaceutical Works Ltd, India’s first pharmaceutical company in 1901.
• ​Karl Marx -
  • Karl Marx or Karl Heinrich Marx is a revolutionary, sociologist, and economist.
  • He wrote Das Kapital book.
  • His thoughts and beliefs are known as Marxism.
  • He argued that industrial society was based on capitalism.
  • Capitalists owned the capital invested in factories and the profit of capitalists was produced by workers.

The correct answer is First.

Key Points

• Harrod Domar model:
  • The 1st Five Year Plan was based on this strategy.
  • This strategy emphasized the role of capital accumulation’s dual character, which on the one hand, increases the national income (demand-side role) and on the other hand, increases the production capacity (supply-side role).
  • Targets and objectives are more or less achieved. With an active role of the state in all economic sectors.
  • Five Indian Institutes of Technology (IITs) were started as major technical institutions.
  • The objective of this plan is Rehabilitation of refugees, rapid agricultural development to achieve food self-sufficiency in the shortest possible time, and control of inflation.
  • According to this growth model, the rate of economic growth in an economy is dependent on the level of savings and capital-output ratio.
  • Thus,

• • Here, the capital-output ratio, defined as the change in capital divided by change in output measures the productivity of investment that takes place.

Additional Information

•  MEANING OF ECONOMIC PLANNING:
  • Economic planning refers to the path of actions in terms of policy measures to be followed in the future, in pursuance of pre-determined objectives.
  • Planning Commission (now NITI Aayog) defines economic planning as the utilization of a country’s resources for developmental activities in accordance with national priorities.
  • It is a consciously and judiciously carried out process for optimum utilization of existing resources in order to fulfill some well-defined objectives.
  • The first five-year plan in India was launched in 1951 and since then, India has witnessed twelve Five Year Plans.
  • The present government had however discontinued the Five-year plan system and a new mechanism was put into place.

Important Points

•  PLANNING COMMISSION:
  • After independence in 1950, the Planning Commission was set up under the chairmanship of Pt Jawaharlal Nehru.
  • It was to formulate plans for the economic development of the country on the basis of the available physical, capital, and human resources.
  • The Planning Commission is essentially a non-political and non-constitutional advisory body,  which makes recommendations to the government.
  • It was set up through an executive order of the Union Government on 15th March 1950.
• National Institution for Transforming India (NITI Aayog) Introduction of NITI Aayog:
  • NITI Aayog or National Institution for Transforming In  dia Aayog is a policy ‘think- tank’ of government that replaces the Planning Commission and aims to involve states in economic policy-making.
  • It will be providing strategic and technical advice to the central and the State Governments.
  • Prime Minister heads the Aayog as its Chairman.

The correct answer is Reserve Bank of India.

Important Points

• In India, the monetary policy is controlled by the Reserve Bank of India.
• The Reserve Bank of India (RBI) is India's central bank.
  • RBI was established on 1^st April 1935.
  • The headquarters of the RBI is located in Mumbai, Maharashtra.
  • RBI was set up on the recommendation of the Hilton Young Commission.
  • Reserve Bank of India act was passed in 1934.
  • RBI is also called as "Banker's Bank".
  • RBI was nationalised on 1^st January 1949.
  • Reserve Bank of India issues all the currency notes above one rupee.
  • Sir Osborne Smith served as the first governor of RBI.
  • C. D. Deshmukh served as the first Indian governor of RBI.
  • Shaktikanta Das is the 25^th governor(Incumbent) of the Reserve Bank of India.​

Key Points

• Important functions of the Reserve Bank of India are:
  • Monetary policy.
  • Regulation and supervision of the banking and non-banking financial institutions, including credit information companies.
  • Regulation of money, forex and government securities markets as also certain financial derivatives.
  • Debt and cash management for Central and State Governments.
  • Management of foreign exchange reserves.
  • Foreign exchange management: current and capital account management.
  • Banker to the Central and State Governments.
  • Oversight of the payment and settlement systems.
  • Currency management.

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.