Economy questions for practice:

Economy plays a very vital role in every exam from UPSC to SSC to BANK exam.

Candidates from different background than economics find economy very hard.

You will find these helpful- short notes for ECONOMY

So here we are with the economy questions for practice.


Que-1. Which of the following features of India agriculture?

  1. Disguised unemployment
  2. High productivity
  3. Majority of large farmers
  4. Gamble in the hands of monsoon


(a) 1 and 2                         (b) 1 and 3

(c) 2 and 4                         (d) 1 and 4


Que-2. Which of the following is not among the dimensions used for measuring Gender Inequality Index (GII) by UNDP?

             (a)  Labour market participation

             (b)  Infant mortality

             (c) Reproductive heath

             (d)  Empowerment


Que-3.  Basel II norms of the Bank of International Settlements covers apart from Financial Rick:

  1. Supervisory Review
  2. Market Discipline
  3. Corporate Social Responsibility

Select the correct combination from the above:

    (a) 1 and 2                           (b) 1, 2 and 3

    (c) 2 and 3                          (d) 1 non 3


Que-4.  Consider the following statements in respect of the functions of World Trade Organization (WTO):

  1. It seeks to make international trade free by establishing predictable and transparent ground rules.
  2. It promotes capital flow from developed to developing countries.
  3. It provides a forum for trade negotiations.
  4. It works as a neutral agency for settlement of trade disputes:

Identify the correct statements from the above:

         (a) 1, 3 and 4                               (b) 2, 3 and 4

         (c) 1, 2, 3 and 4                           (d) 1, 2 and 3

You may also like this-All about economic policies 

Que-5.  Inflation is described as a regressive form of taxation because:

             (a)  it affects exports and makes imports attractive

             (b)  it leads to devaluation of the currency

             (c) it may cause recession

            (d)  it affects the poor and vulnerable sections more


Que-6.  Demand management to control inflation may lead to:

              (a)  increase in government expenditure

              (b)  increase in unemployment due to contraction of the economy    

              (c) expansion of credit

              (d)  creation of excess liquidity


Que-7.  Consider the following recommendations:

  1. RBI should target only on reducing inflation and use only a single instrument to keep inflation under control;
  2. Foreign investors should be allowed to invest in government bond market;
  3. Government should sell small under-performing public sector banks;
  4. Banks should be allowed to open branches and ATMs everywhere without restrictions.

Which of the above are among the recommendations of the Reghuram Rajan Committee on Financial Sector Reforms?

          (a) 1, 2, 3 and 4                           (b) 1, 2 and 3

          (c) 2 and 3                                   (d) 1, 3 and 4

You may also like-  National income in Economy

Que-8. Consider the following statements

  1. The subprime crisis which hit the U.S economy was caused by the sudden increase in oil prices.
  2. The crises led to default in oil prices.
  3. It led to the failure of some U.S banks.
  4.   Subprime crisis caused crash in Indian stock markets.

Which of the statements given above is/are correct?

       (a) 2, 3 and 4                                (b) 1 only

        (c) 1, 2, 3 and 4                           (d) 2 and 4


Que-9.  Consider the following statements about Commodity Futures Market in India:

  1. It facilitates the price discovery process and provides an opportunity to manage price ricks.
  2. It consists of agricultural commodities, bullion, energy and base metals.
  3.   It is regulated by the Forward Market commission.
  4. It affords an opportunity to participants to reverse their contractual obligations by entering into an opposite trade.

Select the correct answer from the codes given below: 

        (a) 3 and 4 only                          (b)  1 and 3 only

        (c) 1, 2, 3 and 4                          (d) 2 and 3 only


Que-10.  International capital flows have been uncertain and volatile, causing exchange rate and balance of payment crises among developing countries. Among the various sources of external capital available to India which source would you consider as the most preferable?

       (a)  Foreign institutional investment

       (b)  Portfolio investment

       (c) External commercial borrowing

       (d)  Foreign direct investment

 You may also like- all about forex reserve

Que-11. Comparison of GDPs does not give a clear picture of the relative development of countries. Which of the following is not an explanation for this? 

         (a)  The purchasing power of the same unit of currency may vary from country to country.

         (b)  All high-income countries need not be developed countries.

         (c)   Central bank’s intervention in fixing the exchange rate may distort the true value of a currency.

          (d)  Financial sector is not fully developed in many developing countries.


Que-12.  A dual economy means:

  1. The existence of black money and white money
  2. the existence of agriculture and industry
  3. the existence of commercial agriculture with subsistence farming
  4. modern industry and commercial agriculture coexisting with subsistence farming  and traditional    handicrafts


                 (a) 1 only                            (b) 1, 2 and 4

                 (c) 2, 3 and 4                      (d) All of these



Que-13.  With reference to India’s food policy, consider the following statements:

  1. It seeks to avert famines by maintaining a buffer stock
  2. It ensure remunerative price for the farmers so that they do not switch crops
  3. It encourages surplus production for the export market
  4. It aims to maintain general price line

Which of these statements are correct?

          (a)1, 2 3 and 4                 (b) 1 and 4

          (c) 1, 2 and 4                   (d) 1 and 4


Also see here-Financial markets in India

Answers of set-a of economy questions for practice

  1. D
  2. B
  3. A
  4. A
  5. D
  6. B
  7. A
  8. A
  9. C
  10. D
  11. D
  12. C
  13. C

Thank you and all the best

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