MCQs on India's Economy: GDP, Inflation, RBI Policy

451.

If the RBI's MPC decides to increase the policy repo rate, what is the most likely immediate effect on the economy?

A Increased liquidity and lower borrowing costs.

B Reduced liquidity and higher borrowing costs for consumers and businesses.

C Stimulated investment and consumption.

D Decreased inflation due to increased money supply.

452.

Which body is responsible for setting the policy repo rate in India?

A The Ministry of Finance.

B The Securities and Exchange Board of India (SEBI).

C The Monetary Policy Committee (MPC).

D The NITI Aayog.

453.

The primary objective of the Reserve Bank of India (RBI) as per its mandate is to:

A Maximize economic growth at all costs.

B Maintain price stability while keeping in mind the objective of growth.

C Ensure a fixed exchange rate for the Indian Rupee.

D Regulate the stock market exclusively.

454.

The target fiscal deficit of 4.5% of GDP by FY26 is significant for India primarily because it:

A Guarantees immediate economic growth of 10% annually.

B Signals fiscal discipline to investors and rating agencies.

C Eliminates the need for any government borrowing.

D Leads to a complete removal of indirect taxes.

455.

Which of the following is a key strategy for the Indian government to achieve its fiscal consolidation targets?

A Increasing non-essential government expenditure.

B Reducing tax compliance and revenue collection.

C Improving tax compliance and managing expenditure prudently.

D Increasing reliance on deficit financing without any revenue augmentation.

456.

A reduction in India's fiscal deficit is likely to lead to:

A Increased inflation and higher interest rates.

B Reduced government borrowing and potentially lower interest rates.

C Decreased foreign direct investment.

D Higher taxes on essential goods.

457.

What does a fiscal deficit represent?

A The total revenue of the government in a financial year.

B The difference between government expenditure and its total revenue (excluding borrowings).

C The amount of money borrowed by the government from foreign countries.

D The surplus generated by public sector undertakings.

458.

Which of the following is the primary objective of the Fiscal Responsibility and Budget Management (FRBM) Act, 2003?

A To increase government spending on infrastructure.

B To reduce the fiscal deficit and manage government debt.

C To privatize loss-making public sector undertakings.

D To implement a Goods and Services Tax (GST).

459.

The RBI's stance on economic growth is described as 'supportive' due to:

A High inflation rates

B Stable inflation within the target band

C Economic recession

D Increased unemployment

460.

What does 'Consumer Price Index (CPI)' measure?

A The wholesale prices of goods

B The average change over time in the prices paid by urban consumers for a market basket of consumer goods and services

C The prices of raw materials

D The prices of exported goods

Economy & Business MCQs