Indian Economy — Practice

Question 1

The repo rate is the rate at which:
(a) banks lend to their best customers (b) the RBI lends short-term funds to commercial banks against securities (c) banks park surplus funds with the RBI (d) the RBI lends to the central government

Accepted Answer

(b).

Repo = RBI lending to banks against government securities. Option (c) describes the reverse repo; (a) is the prime/base lending rate concept.

Question 2

GST came into force on 1 July 2017 through which Constitutional Amendment?
(a) 97th (b) 100th (c) 101st (d) 122nd

Accepted Answer

(c) 101st.

Introduced as the 122nd Amendment Bill, enacted as the 101st Constitutional Amendment Act, 2016. The bill-number 122nd is the standard distractor.

Question 3

NITI Aayog replaced the Planning Commission with effect from:
(a) 15 August 2014 (b) 1 January 2015 (c) 1 April 2015 (d) 26 January 2016

Accepted Answer

(b) 1 January 2015.

NITI Aayog is a policy think tank chaired by the Prime Minister; unlike the Planning Commission it has no power to allocate funds.

Question 4

The fiscal deficit of the government equals:
(a) revenue expenditure − revenue receipts (b) total expenditure − total receipts including borrowings (c) total expenditure − total receipts excluding borrowings (d) fiscal deficit − interest payments

Accepted Answer

(c).

Fiscal deficit excludes borrowings from receipts — it measures exactly how much the government must borrow. Option (a) is the revenue deficit; (d) is the primary deficit definition inverted.

Question 5

The Reserve Bank of India was established in 1935 and nationalised in:
(a) 1947 (b) 1949 (c) 1951 (d) 1955

Accepted Answer

(b) 1949.

RBI: established 1 April 1935 under the RBI Act 1934, nationalised on 1 January 1949. (1955 is the State Bank of India's creation from the Imperial Bank — a common confusion.)

Question 6

Under India's inflation-targeting framework, the Monetary Policy Committee targets:
(a) WPI inflation of 4% ± 2% (b) CPI inflation of 4% ± 2% (c) CPI inflation of 6% ± 2% (d) GDP deflator of 5%

Accepted Answer

(b).

The 2015 Monetary Policy Framework Agreement sets a CPI (Combined) target of 4% with a ±2% band, pursued by the six-member MPC. WPI is not the target measure.

Question 7

GDP at market price exceeds GDP at factor cost whenever:
(a) subsidies exceed indirect taxes (b) indirect taxes exceed subsidies (c) depreciation is high (d) net factor income from abroad is positive

Accepted Answer

(b).

MP = FC + indirect taxes − subsidies, so MP > FC exactly when indirect taxes outweigh subsidies. Depreciation separates NNP from GNP; NFIA separates GNP from GDP — different boundaries.

Question 8

The primary deficit equals:
(a) fiscal deficit + interest payments (b) fiscal deficit − interest payments (c) revenue deficit − interest receipts (d) total borrowing of the government

Accepted Answer

(b).

Primary deficit = fiscal deficit − interest payments. It isolates the fresh borrowing need of the current year, setting aside the burden of past debt. A zero primary deficit means all borrowing merely services old debt.

Question 9

The Tendulkar Committee and the Rangarajan Committee are both associated with:
(a) tax reforms (b) financial-sector reforms (c) poverty estimation (d) FRBM review

Accepted Answer

(c) Poverty estimation.

Tendulkar (2009) and Rangarajan (2014) both re-estimated India's poverty line and headcount. The FRBM review committee was chaired by N.K. Singh — a favourite mix-and-match distractor.

Question 10

The Wholesale Price Index (WPI) is compiled and released by:
(a) NSO, MoSPI (b) the RBI (c) the Office of the Economic Adviser, DPIIT (d) the Department of Economic Affairs

Accepted Answer

(c).

WPI comes from the Office of the Economic Adviser under DPIIT (Ministry of Commerce & Industry), base year 2011–12. NSO compiles CPI and the PLFS — assuming one compiler for all indices is the trap.

Question 11

The Union Budget is formally called the Annual Financial Statement under which Article of the Constitution?
(a) Article 110 (b) Article 112 (c) Article 266 (d) Article 280

Accepted Answer

(b) Article 112.

Article 112 mandates the Annual Financial Statement. The neighbours are all real distractors: Art 110 defines Money Bills, Art 266 the Consolidated Fund, Art 280 the Finance Commission.

Practice — Indian Economy

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