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

The correct answer is 9th Five Year Plan.Key Points

• 9th Five Year Plan was implemented under the leadership of Shri. Atal Bihari Vajpayee.

• Duration: 1997 to 2002
• The main aim of this plan was "Development with Justice and Equality".
• The scheme was not successful in achieving its growth target rate of 7% and achieved only a 5.6% growth rate.
• In Madhya Pradesh, Pradhan Mantri Gram Sadak Yojna was implemented in 2000.

Additional Information

• ​The idea of five-year plans is simple, The Government of India prepares a document with all its income and expenditure for five years.
• The budget of the central government and all the state governments is divided into two parts: non-plan budget and plan budget.
• National Planning Committee was set up under the Chairmanship of Jawaharlal Nehru in 1938.
• The Planning Commission was constituted in India in 1950 as a non-constitutional and advisory corporation.

The correct answer is 33.

Key Points

• The Reserve Bank of India (RBI) operates through 33 regional branches across India as of the latest updates.
• These branches are strategically located to ensure effective implementation of monetary policies and supervision of banking operations nationwide.
• The RBI headquarters is situated in Mumbai, Maharashtra, with regional offices in major cities like Delhi, Kolkata, Chennai, and Bengaluru.
• RBI branches play a pivotal role in currency issuance, public debt management, and regulation of banks in their respective regions.
• Each branch is tasked with specific functions such as maintaining financial stability, ensuring smooth payment systems, and promoting economic growth in its zone.

Additional Information

• Reserve Bank of India (RBI)
  • Established on April 1, 1935, under the Reserve Bank of India Act, 1934.
  • The RBI is India's central bank responsible for regulating the country's banking system and implementing monetary policies.
  • It was nationalized in 1949 and operates as an independent institution.
• Functions of the RBI
  • Formulates and implements monetary policy to maintain price stability and economic growth.
  • Issues currency notes and manages the supply of money in the economy.
  • Acts as a banker to the government and provides financial services.
  • Regulates and supervises commercial banks and financial institutions.
• Hierarchy of RBI Offices
  • Regional offices are headed by Regional Directors and are supported by local departments.
  • These offices are involved in operations like currency management, public complaints, and handling banking regulations.
• RBI Subsidiaries
  • Key subsidiaries include the Deposit Insurance and Credit Guarantee Corporation (DICGC) and Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL).
  • These entities support RBI's operations related to note printing and deposit insurance.

The correct answer is option 4 i.e. IMF.

The International Monetary Fund (IMF) resolves all balance of payments issues around the world by lending money to fix the issue.

• The IMF is a world organization to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic process, and reduce poverty round the world.
• Countries contribute funds to a pool through a quota system from which countries experiencing balance of payments problems can borrow money.
• These loan conditions make sure that the borrowing country are ready to repay the IMF which the country won't try to solve their balance-of-payment problems during a way that might negatively impact the international economy.
• The IMF was established on December 27^th, 1944 and is headquartered in Washington D.C. USA.

The correct answer is the reverse repo rate.

• The rate at which the Reserve Bank of India takes loans from other banks is called the reverse repo rate.

Key Points

• Reverse Repo Rate:
  • It is the rate, at which banks park short-term excess liquidity with the RBI.
  • The current reverse repo rate is 3.35%

Additional Information

• Bank Rate:
  • It is also called the rediscount rate.
  • It is the rate, at which the RBI gives finance to commercial banks.
• Cash Reserve Ratio (CRR):
  • The RBI (Amendment) Bill, 2006, empowers RBI to prescribe CRR–Cash that banks deposit with the RBI without any floor rate or ceiling rate.
  • The current CRR rate is 4.5%.
• Statutory Liquidity Ratio (SLR):
  • It is the ratio of liquid assets, which all commercial banks have to keep in the form of cash, gold, and unencumbered approved securities equal to not more than 40% of their total demand and time deposit liabilities (ranges is 25‑40%).
  • The current SLR is 18.00%.
• ​Repo Rate:
  • It is the rate, at which RBI lends short-term money to the bank against securities.
• Open Market Operations (OMOs):
  • Under OMOs, the RBI sells G-securities in the market.

The correct answer is Fiscal deficit.

Key Points

• Fiscal Deficit is the difference between the total income of the government (total taxes and non-debt capital receipts) and its total expenditure.
• A recurring high fiscal deficit means that the government has been spending beyond its means.
• The government meets the fiscal deficit by borrowing money. In a way, the total borrowing requirements of the government in a financial year are equal to the fiscal deficit in that year.
• A fiscal deficit situation occurs when the government’s expenditure exceeds its income excluding borrowings.
• This difference is calculated both in absolute terms and also as a percentage of the Gross Domestic Product (GDP) of the country.
• Fiscal Deficit formula:
  • ​Fiscal Deficit = Total expenditure of the government (capital and revenue expenditure) – Total income of the government (Revenue receipts + recovery of loans + other receipts)

Additional Information

• Constitutes the government’s total income or receipts:​
• Revenue receipts of the government:
  • ​Corporation Tax.
  • Income Tax.
  • Custom Duties.
  • Union Excise Duties.
  • GST and taxes of Union territories.
• Non-tax revenues:
  • ​Interest Receipts.
  • Dividends and Profits.
  • External Grants.
  • Other non-tax revenues.
  • Receipts of union territories.
• Expenditures of the government:
  • ​Revenue Expenditure.
  • Capital Expenditure.
  • Interest Payments.
  • Grants-in-aid for creation of capital assets.

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 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 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 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.