Prelims MCQs Quiz 15 : Economy


1. Fiscal consolidation is one of the objectives of India’s economic policy. Which of the following would help in fiscal consolidation ?
1. increasing taxes
2. getting more loans
3. reducing subsidies
Select the correct answer using the codes given below.
a) 1 and 2 only
b) 1 and 3 only
c) 2 and 3 only
d) 1, 2 and 3

Answer & Explanation

2. With reference to pulses, consider the following statements :
1. India is the largest producer of pulses.
2. India imports pulses to meet its domestic demand.
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

Answer & Explanation

3. The government provides subsidies in various sectors. Which of the following are the effects of subsidies ?
1. it increases inflation
2. it increases fiscal deficit
3. it decreases export competitiveness
Select the correct answer using the codes given below.
a) 1 and 2 only
b) 2 only
c) 2 and 3 only
d) 1,2 and 3

Answer & Explanation

4. The Fiscal Responsibility and Budget Management (FRBM) Act aimed for
1. eliminating both revenue deficit and fiscal deficit
2. giving flexibility to RBI for inflation management
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

Answer & Explanation

5. With reference to deficit financing, monetized deficit is the part that is financed through
a) borrowings from public sector scheduled commercial banks
b) external commercial borrowings
c) borrowings from RBI
d) none of the above

Answer & Explanation

6. All banks are mandated to lend to priority sector. Which of the following would come under Priority Sector Lending ( PSL ) ?
1. loans to corporations
2. loans to Self Help Groups
3. loans to small and marginal farmers
4. loans to state government
Select the correct answer using the codes given below.
a) 1 and 2 only
b) 1 and 3 only
c) 2 and 3 only
d) 2,3 and 4 only

Answer & Explanation

7. Consider the following statements about Index of Industrial Production ( IIP )
1. It is released monthly by Central Statistical Organisation ( CSO )
2. It shows the volume of industrial activity.
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

Answer & Explanation

8. Financial market is classified into money market and capital market. Which of these are money market instruments ?
1. T-Bills
2. Preference shares
3. Commercial papers
Select the correct answer using the codes given below.
a) 1 and 2 only
b) 1 and 3 only
c) 2 and 3 only
d) 1,2 and 3

Answer & Explanation

9. Suppose you went to a restaurant and paid certain taxes. which of these would be considered an indirect tax ?
1. service tax paid for lunch
2. tip given to waiter
3. VAT paid
Select the correct answer using the codes given below.
a) 1 and 2 only
b) 1 and 3 only
c) 2 and 3 only
d) 1, 2 and 3

Answer & Explanation

10. The expenditure in India is classified as capital and revenue. Which of the following is/are revenue expenditure ?
1. interest payments on debt
2. loans granted by central government
3. subsidies
Select the correct answer using the codes given below.
a) 1 and 2 only
b) 1 and 3 only
c) 2 and 3 only
d) 1, 2 and 3

Answer & Explanation

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Please read these important articles about prelims preparation

1. How UPSC asks current affairs in GS Prelims

2. How to practice prelims MCQs for UPSC

3. Applying logic in UPSC General Studies Prelims

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