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Food Security – PDS, Buffer Stocks, Zero Hunger Mission

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Key concepts

Food Security Public Distribution System (PDS) Buffer Stocks Zero Hunger Mission

Quick recall · 278 cards
Short MCQ-style retrieval prompts. Tap a card to reveal the answer.
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NITI Aayog was established on which date?
B · 1st January 2015
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What is the full form of NITI?
B · National Institution for Transforming India
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Which of the following statements is correct regarding NITI Aayog?
A · NITI Aayog was formed on 25th January 2016
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Which of the following are functions of NITI Aayog?
D · Both 2 and 3
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Which of the following statements regarding the role of NITI Aayog in Five-Year Plans is correct?
C · NITI Aayog has no role in Five-Year Plans as the Planning Commission has been scrapped
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Which of the following is NOT a major objective of land reforms in India?
C · Increase in agricultural exports
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MSP (Minimum Support Price) is announced by the government primarily to:
B · Protect farmers from price fluctuations
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The wheat-rice cropping pattern is predominantly found in which region of India?
B · Northern Plains
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Irrigation enables multiple cropping by:
B · Providing assured water supply throughout the year
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The two factors determining 'Food Security' in India are:
D · Availability, Accessibility and Affordability
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The Government Policy 'Make in India' aims at ______. A. Import substitution B. Reducing red-tapism C. Build best in class manufacturing infrastructure in the country D. Promoting exports
C · Build best in class manufacturing infrastructure in the country
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Which among the following Industrial Policy Resolutions formed the basis for the Second Five Year Plan?
C · Industrial Policy Resolution of 1956
PYQ · 2023 Tap to reveal →
Which of the following activities of Reserve Bank of India is considered to be part of ‘Sterilization’?
A · Conducting ‘Open Market Operations’
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Which of the following is true about the functions of RBI-
A. Export finance
B. Agriculture finance
C. Collecting data and publication
D. Exchange management and control
C · C
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To control inflation and tackle the problem of exchange liquidity due to foreign exchange inflows, the RBI
A. Sells government securities.
B. Purchase securities
C. Decrease bank rate.
D. Raise interest rate.
A · A
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Who is the Chairman of the Monetary Policy Committee?
C · Governor of the Reserve Bank of India
PYQ · 2025 Tap to reveal →
In the context of the Reserve Bank of India's monetary policy operations, a sustained period of increasing Repo Rate is generally expected to have which of the following effects on the Indian economy?
A · Dampen demand-pull inflation by increasing the cost of borrowing and investment
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Which type of unemployment is found in India?

(1) Disguised unemployment
(2) Seasonal unemployment
(3) Educational unemployment
(4) Structural unemployment
A · Disguised unemployment
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'Usual Principal Status', 'Usual Subsidiary Status' and 'Usual Principal and Subsidiary Status' approaches are used in the measurement of

(1) GDP
(2) Unemployment
(3) Inflation
(4) Services Sector Growth Rate
B · Unemployment
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What is the primary objective of economic planning in India?
A · To achieve balanced economic growth
The primary objective of economic planning in India is to achieve balanced economic growth by allocating resources efficiently across sectors.
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Which of the following best defines economic planning in the Indian context?
A · A process of setting economic goals and allocating resources to achieve them
Economic planning involves setting economic goals and allocating resources systematically to achieve balanced growth and development.
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Which of the following is NOT an objective of economic planning in India?
C · Maximizing short-term profits for private companies
Maximizing short-term profits for private companies is not an objective of economic planning, which focuses on social welfare and balanced growth.
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Economic planning in India aims to achieve which of the following?
A · Rapid industrialization and poverty eradication
Economic planning aims at rapid industrialization and poverty eradication among other goals like balanced regional development.
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Which event marked the beginning of formal economic planning in India?
A · Establishment of Planning Commission in 1950
The establishment of the Planning Commission in 1950 marked the beginning of formal economic planning in India.
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Who was the first Prime Minister of India to introduce the concept of Five Year Plans?
A · Jawaharlal Nehru
Jawaharlal Nehru introduced the concept of Five Year Plans to guide India's economic development.
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Which of the following statements about the Bombay Plan (1944) is correct?
A · It was a proposal by Indian industrialists for post-independence economic development
The Bombay Plan was a proposal by leading Indian industrialists outlining a framework for economic development after independence.
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Which of the following best describes the role of the Planning Commission in India's economic history?
A · Formulating Five Year Plans and allocating resources
The Planning Commission was responsible for formulating Five Year Plans and allocating resources to various sectors.
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Which of the following was a major criticism of the early Five Year Plans in India?
A · Excessive focus on heavy industries at the expense of agriculture
Early Five Year Plans focused heavily on heavy industries, often neglecting agriculture, which was a major criticism.
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Which Five Year Plan is known as the 'Plan for Self-Reliance' in India?
A · Fourth Five Year Plan
The Fourth Five Year Plan (1969-74) emphasized self-reliance and growth with stability.
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Which sector received the highest priority during the Second Five Year Plan (1956-61)?
A · Industrial sector
The Second Five Year Plan focused on rapid industrialization, especially heavy industries.
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Refer to the diagram below showing sectoral allocation of funds in the First Five Year Plan. Which sector received the maximum allocation?
A · Agriculture
The First Five Year Plan prioritized agriculture to ensure food security and rural development.
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Which of the following was a key feature of the Fifth Five Year Plan (1974-79)?
A · Poverty alleviation and self-reliance
The Fifth Five Year Plan emphasized poverty alleviation and self-reliance in economic development.
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Which Five Year Plan was abandoned midway due to political instability and economic crisis?
B · Third Five Year Plan
The Third Five Year Plan was abandoned midway due to the Indo-China war and economic difficulties.
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Which of the following is considered a major achievement of the Five Year Plans in India?
A · Establishment of a strong industrial base
One major achievement was the establishment of a strong industrial base, though poverty and regional disparities persisted.
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Which of the following was a significant failure of the Five Year Plans in India?
A · Inadequate agricultural growth leading to food shortages
Agricultural growth was often inadequate, leading to food shortages and dependence on imports.
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Which of the following statements about the performance of Five Year Plans is correct?
B · The plans achieved rapid industrial growth but failed in equitable distribution
The Five Year Plans achieved industrial growth but were less successful in equitable wealth distribution.
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Refer to the table below showing GDP growth rates during various Five Year Plans. Which plan recorded the highest average GDP growth rate?
D · Tenth Five Year Plan
The Tenth Five Year Plan (2002-07) recorded the highest average GDP growth rate among the listed plans.
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Which of the following best explains the reason for replacing the Planning Commission with NITI Aayog?
A · To promote cooperative federalism and a more flexible planning approach
NITI Aayog was created to promote cooperative federalism and adopt a more flexible, bottom-up approach to planning.
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When was NITI Aayog established as a replacement for the Planning Commission?
A · 1 January 2015
NITI Aayog was established on 1 January 2015 to replace the Planning Commission.
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Which of the following was NOT a reason for the transition from Planning Commission to NITI Aayog?
C · To abolish all economic planning in India
The transition aimed to improve planning, not abolish it.
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Which of the following best describes the difference in approach between Planning Commission and NITI Aayog?
A · Planning Commission was top-down; NITI Aayog promotes bottom-up planning
Planning Commission followed a top-down approach, while NITI Aayog emphasizes bottom-up planning and cooperative federalism.
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Which of the following is the highest decision-making body in NITI Aayog?
A · Governing Council
The Governing Council, consisting of Chief Ministers and Lt. Governors, is the highest decision-making body in NITI Aayog.
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Which of the following is NOT a function of NITI Aayog?
C · Allocating funds to states directly
NITI Aayog does not allocate funds directly; this is done by the Finance Commission and the Ministry of Finance.
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Refer to the flowchart below depicting the structure of NITI Aayog. Which body is responsible for day-to-day operations?
A · Vice Chairman and CEO
The Vice Chairman and CEO handle the daily operations of NITI Aayog.
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Which of the following roles does NITI Aayog play in India's economic planning framework?
A · Policy think tank and advisory body
NITI Aayog acts as a policy think tank and advisory body, not as an implementing or regulatory agency.
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Which of the following is a key feature of the current economic planning framework under NITI Aayog?
A · Focus on cooperative federalism and sustainable development
NITI Aayog emphasizes cooperative federalism and sustainable development in its planning framework.
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Which of the following initiatives is promoted by NITI Aayog to foster innovation and entrepreneurship?
A · Atal Innovation Mission
The Atal Innovation Mission is an initiative by NITI Aayog to promote innovation and entrepreneurship.
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Refer to the graph below showing the shift in India's economic planning approach from 1950 to present. Which period corresponds to the introduction of NITI Aayog?
A · 2015 onwards
NITI Aayog was introduced in 2015, marking a new phase in economic planning.
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Which of the following best describes the policy formulation mechanism under NITI Aayog?
A · Collaborative and consultative with states and stakeholders
NITI Aayog follows a collaborative approach involving states and stakeholders for policy formulation.
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Which of the following is a key feature of the implementation mechanism of policies under NITI Aayog?
A · Monitoring and evaluation through data-driven tools
NITI Aayog emphasizes monitoring and evaluation using data-driven tools to improve policy outcomes.
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Which of the following statements best describes the difference between Planning Commission and NITI Aayog?
A · Planning Commission was a centralized body; NITI Aayog promotes cooperative federalism
Planning Commission was centralized, whereas NITI Aayog promotes cooperative federalism and participatory planning.
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Refer to the table below comparing features of Planning Commission and NITI Aayog. Which feature is unique to NITI Aayog?
A · Promotion of cooperative federalism
Promotion of cooperative federalism is a unique feature of NITI Aayog, not present in the Planning Commission.
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Which of the following is an analytical difference between Planning Commission and NITI Aayog?
A · Planning Commission was directive; NITI Aayog is advisory and facilitative
Planning Commission had directive powers, whereas NITI Aayog functions mainly as an advisory and facilitative body.
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Which of the following best explains the shift in policy focus from Planning Commission to NITI Aayog?
A · From centralized planning to cooperative and decentralized planning
The shift is from centralized planning under Planning Commission to cooperative and decentralized planning under NITI Aayog.
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Which of the following statements is correct regarding the policy formulation process under NITI Aayog?
A · It involves collaborative consultation with states and stakeholders
NITI Aayog emphasizes collaborative consultation with states and stakeholders for effective policy formulation.
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Which of the following best describes the role of NITI Aayog in monitoring government schemes?
A · It uses data analytics and real-time monitoring to assess progress
NITI Aayog employs data analytics and real-time monitoring to evaluate government schemes and suggest improvements.
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What is the primary objective of economic planning in India?
B · To ensure balanced regional development
The primary objective of economic planning in India is to ensure balanced regional development, reducing disparities between regions.
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Economic planning in India is best defined as:
B · A government-led effort to allocate resources for economic development
Economic planning in India refers to the government-led effort to allocate resources systematically to achieve economic development goals.
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Which of the following is NOT an objective of India's economic planning?
C · Encouraging monopolistic practices
Encouraging monopolistic practices contradicts the objectives of economic planning, which aims for fair competition and equitable growth.
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Which of the following best explains the role of economic planning in reducing regional disparities in India?
B · By allocating resources preferentially to backward regions
Economic planning aims to reduce regional disparities by allocating more resources and development projects to backward and underdeveloped regions.
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Consider a scenario where India wants to achieve sustainable development through its economic plan. Which objective aligns best with this goal?
B · Ensuring environmental protection alongside economic growth
Sustainable development requires balancing economic growth with environmental protection, which is a key objective in modern economic planning.
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Which year marked the launch of the first Five Year Plan in India?
B · 1951
India's first Five Year Plan was launched in 1951, focusing primarily on agriculture and irrigation.
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Who was the chairman of the first Planning Commission of India?
A · Jawaharlal Nehru
Jawaharlal Nehru, the first Prime Minister of India, was the chairman of the first Planning Commission.
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Which of the following statements best describes the evolution of economic planning in India?
A · It started with centralized planning and shifted towards decentralized approaches over time
India's economic planning started with centralized planning via the Planning Commission and gradually moved towards decentralized and cooperative federalism with NITI Aayog.
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Which of the following was a major limitation of early Five Year Plans in India?
C · Inadequate attention to social sectors like health and education
Early Five Year Plans focused largely on agriculture and industry but gave less attention to social sectors such as health and education.
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Which Five Year Plan in India is known for emphasizing the 'Green Revolution'?
D · Fifth Plan
The Fifth Five Year Plan (1974-79) emphasized the Green Revolution to increase agricultural productivity.
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The Planning Commission of India was replaced by NITI Aayog in which year?
C · 2015
The Planning Commission was replaced by NITI Aayog in 2015 to promote cooperative federalism and a more flexible planning approach.
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Which of the following was a key reason for replacing the Planning Commission with NITI Aayog?
B · To promote cooperative federalism and involve states in planning
NITI Aayog was created to promote cooperative federalism by involving states in the economic planning process.
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Which of the following statements correctly distinguishes NITI Aayog from the Planning Commission?
C · Planning Commission was a centralized body, NITI Aayog promotes decentralization
Planning Commission was a centralized planning body, whereas NITI Aayog promotes decentralization and cooperative federalism.
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Identify the correct chronological order of the following events: (1) Establishment of Planning Commission, (2) Launch of First Five Year Plan, (3) Formation of NITI Aayog.
A · 1, 2, 3
Planning Commission was established in 1950, First Five Year Plan launched in 1951, and NITI Aayog formed in 2015.
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Refer to the diagram below showing the organizational structure of NITI Aayog. Which component is primarily responsible for fostering innovation and entrepreneurship?
B · Innovation Hub
The Innovation Hub within NITI Aayog focuses on promoting innovation and entrepreneurship.
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Which of the following is NOT a function of NITI Aayog?
C · Allocating funds to states directly
NITI Aayog does not allocate funds directly to states; this is done by the Ministry of Finance.
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Which body within NITI Aayog is responsible for fostering cooperative federalism by involving states in policy-making?
A · Governing Council
The Governing Council of NITI Aayog includes Chief Ministers of states and promotes cooperative federalism.
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Which of the following best describes the role of NITI Aayog's Vice Chairman?
B · Chief executive responsible for day-to-day operations
The Vice Chairman of NITI Aayog is the chief executive responsible for its daily functioning.
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Which of the following initiatives is a flagship program launched under NITI Aayog to promote innovation?
B · Atal Innovation Mission
The Atal Innovation Mission is a flagship initiative of NITI Aayog to promote innovation and entrepreneurship.
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Which policy framework under NITI Aayog focuses on sustainable resource management and environmental protection?
B · Sustainable Development Goals (SDGs) Framework
NITI Aayog aligns its policy framework with the Sustainable Development Goals (SDGs) to promote sustainable resource management.
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Which of the following is a key feature of the policy framework under NITI Aayog?
B · Focus on cooperative federalism and decentralization
NITI Aayog's policy framework emphasizes cooperative federalism and decentralization, involving states and stakeholders.
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Which of the following best describes the 'Strategy for New India @ 75' launched by NITI Aayog?
B · A vision document outlining India's development goals by 2022
'Strategy for New India @ 75' is a vision document by NITI Aayog outlining India's development goals for 2022.
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Which of the following initiatives is part of the current economic planning framework aimed at improving rural livelihoods?
B · Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY)
DDU-GKY is a rural skill development program aimed at improving livelihoods in rural areas.
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Refer to the table below showing the allocation of funds under different schemes by NITI Aayog in 2022. Which scheme received the highest allocation?
C · Smart Cities Mission - ₹700 crore
According to the table, Smart Cities Mission received the highest allocation of ₹700 crore.
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Which of the following best illustrates the application of NITI Aayog's policy framework in promoting cooperative federalism?
B · States collaborating with NITI Aayog to formulate region-specific development plans
NITI Aayog promotes cooperative federalism by involving states in policy formulation and encouraging collaboration.
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Which of the following Five Year Plans is associated with the slogan 'Garibi Hatao' (Eradicate Poverty)?
D · Sixth Plan
The Sixth Five Year Plan (1980-85) focused on poverty eradication with the slogan 'Garibi Hatao'.
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Which of the following was a major achievement of the Second Five Year Plan (1956-61)?
B · Rapid industrialization and establishment of heavy industries
The Second Five Year Plan emphasized rapid industrialization, especially in heavy industries.
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Which of the following was a significant failure of the Third Five Year Plan (1961-66)?
B · Frequent droughts and wars leading to economic slowdown
The Third Plan faced failures due to droughts and the Indo-China and Indo-Pak wars, which slowed economic growth.
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Which of the following analytical statements about the impact of Five Year Plans on India's economy is correct?
C · Five Year Plans contributed to the establishment of a mixed economy with public sector prominence
Five Year Plans helped establish a mixed economy where the public sector played a significant role alongside private enterprises.
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Refer to the graph below showing GDP growth rates during different Five Year Plans. Which plan period shows the highest average growth rate?
B · Second Plan
The Second Five Year Plan recorded the highest average GDP growth rate due to emphasis on industrialization.
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Which of the following best explains the shift in India's economic planning framework after the introduction of NITI Aayog?
A · From centralized planning to a more flexible, cooperative approach
NITI Aayog represents a shift from centralized planning to a flexible, cooperative federalism-based approach involving states.
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Which of the following initiatives under NITI Aayog aims to transform India into a $5 trillion economy by 2025?
B · Strategy for New India @ 75
The 'Strategy for New India @ 75' outlines the roadmap to achieve a $5 trillion economy by 2025.
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Which of the following best describes the role of NITI Aayog in the current economic planning framework?
B · It acts as a think tank and policy advisor to the government
NITI Aayog primarily functions as a policy think tank and advisor rather than preparing Five Year Plans or controlling finances.
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Refer to the flowchart below depicting the policy formulation process under NITI Aayog. Which step represents the involvement of state governments in decision-making?
B · Consultation with Governing Council
Consultation with the Governing Council involves state governments in policy decisions.
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Which of the following best illustrates an application of economic planning principles in addressing unemployment in India?
A · Launching skill development programs under NITI Aayog
Skill development programs help increase employability, directly addressing unemployment through planned interventions.
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Which of the following statements correctly applies the concept of cooperative federalism promoted by NITI Aayog?
C · States and central government collaborate to achieve common development goals
Cooperative federalism involves collaboration between states and the central government to achieve shared objectives.
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Which of the following best explains why the Planning Commission was criticized leading to its replacement by NITI Aayog?
B · It failed to involve states adequately in planning
The Planning Commission was criticized for its centralized approach and inadequate involvement of states in the planning process.
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Which of the following best describes the analytical difference between the Planning Commission and NITI Aayog?
B · Planning Commission focused on resource allocation, NITI Aayog focuses on policy innovation and cooperative federalism
Planning Commission focused on centralized resource allocation, while NITI Aayog emphasizes policy innovation and cooperative federalism.
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Refer to the chart below showing sector-wise contribution to GDP during different Five Year Plans. Which sector showed the most consistent growth?
C · Services
The services sector showed consistent growth across various Five Year Plans, contributing increasingly to GDP.
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Which of the following best defines 'Food Security' according to the FAO?
B · Access to sufficient, safe, and nutritious food for an active and healthy life
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Which of the following is NOT an indicator commonly used to measure food security?
D · Number of food processing units
Number of food processing units is not a direct indicator of food security; common indicators include calorie intake, prevalence of undernourishment, and food price inflation.
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Which component is NOT part of the three pillars of food security?
C · Affordability
The three pillars of food security are availability, accessibility, and utilization. Affordability is related but not formally one of the three pillars.
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Which of the following best explains the concept of 'Food Utilization' in food security?
C · Proper biological use of food, requiring a diet providing sufficient energy and nutrients
Food Utilization refers to the proper biological use of food, requiring a diet with sufficient energy and nutrients, clean water, sanitation, and healthcare to reach a state of nutritional well-being.
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Refer to the diagram below showing India's food security indicators over the last decade. Which trend indicates improvement in food security?
C · Increase in average food grain production
An increase in average food grain production indicates improved availability, a key factor in food security.
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Which of the following is a primary objective of the Public Distribution System (PDS) in India?
B · To provide subsidized food grains to the poor
The PDS aims to provide subsidized food grains to the poor and vulnerable sections of society to ensure food security.
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Which organization is primarily responsible for procurement and distribution of food grains under the PDS in India?
A · Food Corporation of India (FCI)
The Food Corporation of India (FCI) is the main agency responsible for procurement, storage, and distribution of food grains under PDS.
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Which of the following categories is NOT eligible for subsidized food grains under the Targeted Public Distribution System (TPDS)?
D · Non-resident Indians (NRIs)
NRIs are not eligible for subsidized food grains under TPDS; the scheme targets poor families residing in India.
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Which of the following is a major challenge faced by the Public Distribution System in India?
B · Leakages and diversion of food grains
Leakages and diversion of food grains from PDS channels reduce the effectiveness of the system and are a major challenge.
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Refer to the flowchart below depicting the PDS operational mechanism. Which step correctly represents the role of Fair Price Shops (FPS)?
C · Distribution of subsidized food grains to beneficiaries
Fair Price Shops are the retail outlets that distribute subsidized food grains to eligible beneficiaries.
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Which of the following statements about Buffer Stocks in India is correct?
B · They are stocks of food grains procured and stored to stabilize prices and ensure food security
Buffer stocks are food grains procured and stored by government agencies to stabilize prices and ensure availability during shortages.
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Which agency is primarily responsible for maintaining buffer stocks of food grains in India?
A · Food Corporation of India (FCI)
FCI is responsible for procurement, storage, and maintenance of buffer stocks of food grains.
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What is the primary purpose of releasing buffer stocks into the market?
B · To stabilize food grain prices and ensure supply during shortages
Buffer stocks are released to stabilize prices and ensure availability during periods of shortage or price rise.
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Which of the following is a risk associated with maintaining large buffer stocks of food grains?
B · Storage losses due to pests and spoilage
Large buffer stocks are prone to storage losses caused by pests, spoilage, and wastage, increasing costs.
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Refer to the table below showing buffer stock levels (in million tonnes) over five years. In which year was the buffer stock closest to the prescribed norm of 41.5 million tonnes?
B · Year 2: 42.0
Year 2's buffer stock of 42.0 million tonnes is closest to the norm of 41.5 million tonnes.
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The Zero Hunger Mission in India primarily aims to achieve which of the following by 2030?
B · Universal access to safe, nutritious, and sufficient food
The Zero Hunger Mission aims to end hunger and ensure universal access to safe, nutritious, and sufficient food by 2030.
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Which government program is a key component of the Zero Hunger Mission focusing on nutrition for children and pregnant women?
C · Integrated Child Development Services (ICDS)
ICDS is a flagship program providing nutrition and health services to children and pregnant women, supporting Zero Hunger goals.
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Which Sustainable Development Goal (SDG) aligns directly with the objectives of the Zero Hunger Mission?
B · SDG 2: Zero Hunger
SDG 2 aims to end hunger, achieve food security and improved nutrition, and promote sustainable agriculture, aligning with Zero Hunger Mission.
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Which of the following strategies is NOT part of the Zero Hunger Mission's approach to reducing hunger?
C · Increasing food grain buffer stocks only
While buffer stocks are important, the Zero Hunger Mission focuses on a holistic approach including productivity, distribution, and nutrition, not just increasing buffer stocks.
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Refer to the diagram below showing the implementation framework of the Zero Hunger Mission. Which agency is primarily responsible for monitoring nutrition outcomes?
B · Ministry of Women and Child Development
The Ministry of Women and Child Development monitors nutrition outcomes through programs like ICDS under the Zero Hunger Mission.
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Assertion (A): Buffer stocks help in stabilizing food grain prices. Reason (R): Releasing buffer stocks during surplus production increases market prices. Choose the correct option:
C · A is true but R is false
Buffer stocks stabilize prices by releasing grains during shortages, but releasing stocks during surplus usually lowers prices; hence, reason is false.
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Refer to the graph below showing the percentage of population undernourished and PDS coverage over five years. What inference can be drawn about the relationship between PDS coverage and undernourishment?
B · Higher PDS coverage correlates with lower undernourishment
The graph shows that as PDS coverage increases, the percentage of undernourished population decreases, indicating a negative correlation.
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What is the primary objective of the Make in India initiative launched in 2014?
B · To encourage manufacturing and attract investment
Make in India aims to boost manufacturing in India and attract both domestic and foreign investment to create jobs and enhance economic growth.
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Which of the following sectors was NOT initially a focus sector under the Make in India initiative?
D · Space Technology
While Make in India covers many sectors including automobiles, IT, and textiles, space technology was not among the initial focus sectors.
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Which of the following best describes the Make in India initiative's approach to foreign investment?
B · Encouraging foreign direct investment through ease of doing business reforms
Make in India promotes foreign direct investment by improving ease of doing business and simplifying regulations to attract investors.
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Which of the following is NOT a key feature of the Make in India initiative?
C · Promotion of import substitution only
Make in India encourages both domestic manufacturing and foreign investment, not just import substitution.
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Refer to the diagram below showing the growth in manufacturing output after the launch of Make in India. Which year shows the highest percentage increase compared to the previous year?

201420152016201720185%10%15%20%25%
C · 2017
The bar for 2017 is the tallest compared to previous years, indicating the highest percentage increase in manufacturing output after Make in India.
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Which of the following correctly classifies Micro, Small and Medium Enterprises (MSMEs) based on investment in plant and machinery (manufacturing sector)?
B · Micro: up to ₹50 lakh, Small: up to ₹5 crore, Medium: up to ₹10 crore
According to the latest MSME classification, Micro enterprises invest up to ₹50 lakh, Small up to ₹5 crore, and Medium up to ₹10 crore in plant and machinery.
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Which of the following is a major role played by MSMEs in the Indian economy?
A · Generating employment opportunities
MSMEs are crucial for generating employment, especially in rural and semi-urban areas, contributing significantly to economic growth.
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Which government scheme specifically supports MSMEs by providing credit guarantee without collateral?
B · Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)
CGTMSE provides collateral-free credit guarantee to MSMEs to encourage lending by banks.
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Which of the following challenges is NOT commonly faced by MSMEs in India?
C · High export tariffs imposed by India
India generally promotes exports and does not impose high export tariffs on MSMEs; other options are common challenges.
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Which of the following statements about Foreign Direct Investment (FDI) policy in India is correct?
C · FDI policy is sector-specific with varying limits and routes
India's FDI policy varies by sector, with different limits and routes (automatic or government approval) depending on the industry.
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What is the meaning of the 'automatic route' in the context of FDI policy in India?
B · FDI is allowed without prior approval from the government
Under the automatic route, foreign investors can invest without prior approval from the government, subject to sectoral caps.
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Which sector has a 100% FDI limit under the automatic route in India?
C · Single-brand retail trading
Single-brand retail trading allows 100% FDI under the automatic route, subject to certain conditions.
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Which of the following is a recent reform in India's FDI policy aimed at attracting more foreign investment?
B · Allowing 74% FDI in insurance under automatic route
India increased the FDI limit in insurance to 74% under the automatic route to attract more foreign investment.
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Which of the following is NOT a benefit of FDI for the Indian economy?
D · Complete elimination of trade deficits
While FDI helps in many ways, it does not guarantee complete elimination of trade deficits.
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Which of the following statements is correct regarding the relationship between Make in India and FDI policy?
B · FDI policy reforms support Make in India by easing investment norms
FDI policy reforms have been aligned to support Make in India by simplifying norms and attracting foreign investment in manufacturing.
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Which of the following is TRUE about the impact of MSMEs on India's export sector?
B · MSMEs contribute around 40% to India's total exports
MSMEs contribute approximately 40% to India's total exports, playing a vital role in foreign trade.
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Which of the following is an analytical question about the challenges faced by MSMEs in accessing finance?
B · High collateral requirements limit MSMEs' access to credit
High collateral requirements are a significant barrier for MSMEs in obtaining bank loans, limiting their growth potential.
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Assertion (A): The Indian government allows 100% FDI in single-brand retail under the automatic route.
Reason (R): This policy aims to attract foreign investment and technology in retail.
Which of the following is correct?
A · Both A and R are true, and R is the correct explanation of A
The government allows 100% FDI in single-brand retail under the automatic route to attract foreign investment and technology, making both statements true and R explains A.
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Assertion (A): Make in India focuses on increasing the share of manufacturing in GDP.
Reason (R): Manufacturing sector creates more employment opportunities compared to agriculture.
Choose the correct option:
A · Both A and R are true, and R explains A
Make in India aims to increase manufacturing's GDP share because it generates more employment than agriculture, so both statements are true and R explains A.
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Refer to the diagram below showing the sector-wise FDI limits under the automatic route. Which sector has the lowest FDI limit?

Sector-wise FDI Limits (Automatic Route)0%50%100%DefenseSingle Brand RetailTelecomRailways
B · Defense
The diagram shows Defense with the lowest FDI limit under the automatic route compared to other sectors.
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Which of the following application scenarios best reflects the impact of Make in India on local manufacturing?
B · A foreign investor sets up a new electronics manufacturing unit in India
Make in India encourages foreign investors to establish manufacturing units in India, boosting local production.
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Which of the following best illustrates an application of FDI policy reforms to attract investment in the automobile sector?
B · Allowing 100% FDI under automatic route in automobile manufacturing
FDI policy reforms allow 100% FDI under automatic route in automobile manufacturing to attract foreign investment.
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Which of the following is an example of a conceptual question related to MSMEs?
B · How do MSMEs contribute to rural employment?
Understanding how MSMEs contribute to rural employment tests conceptual knowledge of their role in the economy.
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Which of the following is the primary objective of the Make in India initiative?
B · To encourage manufacturing and attract investments
Make in India aims to boost manufacturing in India and attract domestic and foreign investments to enhance economic growth.
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Under the MSME classification, which of the following criteria is NOT used to categorize enterprises?
D · Type of ownership
MSME classification is based on investment in plant and machinery or equipment and annual turnover, not on ownership type.
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Which of the following sectors allows 100% Foreign Direct Investment (FDI) under the automatic route in India?
B · Single-brand retail
Single-brand retail allows 100% FDI under the automatic route, while defense and atomic energy have restrictions and railway infrastructure requires government approval.
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Which of the following best describes the significance of MSMEs in the Indian economy?
B · They are the largest employers after agriculture
MSMEs are significant as they provide employment to a large section of the population, second only to agriculture, and contribute to industrial output and exports.
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Which of the following is NOT a feature of the Make in India initiative?
C · Promotion of import substitution only
Make in India promotes manufacturing growth and investment, not just import substitution; it also focuses on ease of doing business and sectoral development.
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Which of the following statements about the Make in India initiative is correct?
B · It aims to make India a global manufacturing hub
Make in India was launched in 2014 to transform India into a global manufacturing hub by encouraging investments and innovation.
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Which of the following is a key challenge faced by MSMEs in India?
B · Lack of access to formal credit
MSMEs often face challenges such as limited access to formal credit, which restricts their growth and modernization.
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Which of the following is an application of the Make in India initiative in the automobile sector?
B · Encouraging electric vehicle manufacturing through incentives
Make in India promotes electric vehicle manufacturing by providing incentives to attract investments and technology.
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Which of the following government initiatives supports MSMEs by providing credit guarantee without collateral?
B · Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)
CGTMSE provides credit guarantees to MSMEs, enabling them to access loans without collateral security.
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Which of the following is an example of applying the FDI policy to attract investment in the renewable energy sector?
B · Allowing 100% FDI under automatic route
The renewable energy sector allows 100% FDI under the automatic route to attract investments and promote clean energy.
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Which of the following sectors is NOT a focus sector under the Make in India initiative?
D · Agriculture
Make in India focuses on manufacturing and industrial sectors; agriculture is not a primary focus sector under this initiative.
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Which of the following is a direct benefit of MSMEs to the Indian economy?
D · Enhancing rural employment and entrepreneurship
MSMEs promote rural employment and entrepreneurship by providing opportunities beyond urban centers.
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Which of the following is TRUE regarding the FDI policy in the defense sector in India?
B · FDI up to 74% is allowed with government approval
FDI up to 74% is permitted in the defense sector but requires government approval, not automatic clearance.
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Which of the following statements correctly describes the impact of Make in India on employment?
B · It focuses on creating jobs in the manufacturing sector
Make in India aims to create employment opportunities by boosting manufacturing activities.
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Which of the following is a key reform introduced under the Make in India initiative to improve the ease of doing business?
B · Simplification of labor laws
Make in India includes reforms like simplification of labor laws to improve the ease of doing business.
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Which of the following is an analytical question regarding the impact of FDI on the Indian economy?
B · FDI leads to technology transfer and skill development
FDI often brings advanced technology and skills, positively impacting the domestic economy.
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Which of the following best explains the role of MSMEs in promoting inclusive growth in India?
B · By providing employment opportunities in rural and semi-urban areas
MSMEs promote inclusive growth by generating employment and entrepreneurship in rural and semi-urban areas.
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Which of the following statements about FDI policy changes in India is correct?
B · FDI policy reforms aim to liberalize and simplify investment procedures
Since 2014, India has liberalized FDI norms to attract more foreign investment by simplifying procedures and increasing limits in various sectors.
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Which of the following is an application of MSME development schemes to improve competitiveness?
B · Offering technology upgradation and skill development programs
Government schemes offer technology upgradation and skill development to enhance MSME competitiveness.
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Which of the following is TRUE about the relationship between Make in India and FDI policy?
B · FDI policy reforms support the objectives of Make in India
FDI policy reforms have been aligned to support Make in India's goal of attracting foreign investments to boost manufacturing.
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Which of the following is NOT a direct impact of the Make in India initiative on the Indian economy?
C · Reduction in agricultural output
Make in India focuses on manufacturing and industrial growth; it does not directly affect agricultural output.
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Which of the following is NOT a primary function of the Reserve Bank of India (RBI)?
B · Regulator of the stock market
The RBI regulates banks and monetary policy but does not regulate the stock market; that is the role of SEBI.
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When was the Reserve Bank of India nationalized?
B · 1949
The Reserve Bank of India was nationalized on January 1, 1949.
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Which of the following RBI functions involves controlling inflation by regulating money supply?
A · Monetary policy regulation
Monetary policy regulation by RBI involves controlling inflation and money supply.
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Which of the following tools is NOT used by RBI to regulate liquidity in the banking system?
D · Income Tax Rate
Income Tax Rate is set by the government, not RBI, and is unrelated to liquidity regulation.
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Which of the following statements about the RBI’s role as a lender of last resort is correct?
B · It provides emergency funds to solvent banks facing liquidity crises
RBI acts as a lender of last resort by providing emergency liquidity to solvent banks facing temporary liquidity shortages.
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Refer to the diagram below showing RBI’s balance sheet components. Which component primarily reflects RBI’s currency issuance function?
B · Liabilities: Currency in Circulation
Currency in Circulation on the liabilities side represents the currency issued by RBI.
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Which of the following best defines a Non-Performing Asset (NPA)?
B · A loan or advance where interest or principal remains overdue for more than 90 days
An NPA is a loan or advance where interest or principal remains overdue for more than 90 days.
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Which of the following is a common cause of increase in NPAs in Indian banks?
B · Poor credit appraisal and economic slowdown
Poor credit appraisal and economic slowdown often lead to defaults and increase NPAs.
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Which of the following RBI schemes aims to reduce NPAs by facilitating resolution of stressed assets?
C · Asset Quality Review (AQR)
Asset Quality Review (AQR) by RBI helps identify and resolve stressed assets to reduce NPAs.
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Which of the following categories of loans is most vulnerable to becoming NPAs during economic downturns?
A · Agricultural loans
Agricultural loans are more vulnerable to becoming NPAs due to dependency on monsoon and market fluctuations.
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Refer to the table below showing NPA ratios of four banks. Which bank has the highest Gross NPA ratio?
C · Bank C (Gross NPA: 6.1%)
Bank C has the highest Gross NPA ratio at 6.1%.
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Which government initiative aims to tackle NPAs by encouraging banks to sell bad loans to asset reconstruction companies?
B · Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI)
SARFAESI Act allows banks to sell bad loans to asset reconstruction companies to recover dues.
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Which of the following best describes Financial Inclusion?
B · Ensuring access to financial services for all sections of society at affordable costs
Financial inclusion aims to provide access to financial services to all, especially underserved populations.
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Which of the following schemes was launched by the Government of India to promote financial inclusion through universal bank accounts?
A · Pradhan Mantri Jan Dhan Yojana (PMJDY)
PMJDY was launched to provide universal access to banking facilities.
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Which of the following is NOT a barrier to financial inclusion in India?
D · High literacy rate
High literacy rate facilitates financial inclusion, not a barrier.
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Which of the following technologies has significantly aided financial inclusion in rural India?
B · Mobile banking and Aadhaar-enabled payment systems
Mobile banking and Aadhaar-enabled payment systems have improved access to financial services in rural areas.
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Refer to the graph below showing percentage of population with bank accounts from 2010 to 2020. What trend does the graph indicate?
B · Steady increase in financial inclusion
The graph shows a steady increase in the percentage of population with bank accounts over the years.
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Which of the following is an example of an application of financial inclusion policies?
A · Providing low-cost insurance products to rural farmers
Providing affordable insurance to rural farmers is an application of financial inclusion.
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Which of the following RBI initiatives promotes financial inclusion by enabling small savings and insurance products through banking correspondents?
B · Business Correspondent Model
The Business Correspondent Model helps banks reach remote areas through agents offering financial products.
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Refer to the table below showing financial inclusion indicators across four states. Which state has the highest percentage of adults with bank accounts?
B · State B (82%)
State B has the highest percentage of adults with bank accounts at 82%.
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Which of the following is an example of an application-based question on NPAs?
B · Calculating the impact of NPAs on bank profitability
Calculating the impact of NPAs on profitability requires application of knowledge.
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Which of the following is NOT a primary function of the Reserve Bank of India (RBI)?
C · Regulation of stock markets
The RBI regulates banks and monetary policy but does not regulate stock markets; that is the role of SEBI.
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The Cash Reserve Ratio (CRR) maintained by banks with the RBI is primarily used to:
A · Control inflation by regulating money supply
CRR is the minimum fraction of customer deposits that banks must hold as reserves with the RBI, controlling liquidity and inflation.
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Which of the following statements best describes the role of the RBI as the 'Lender of Last Resort'?
A · RBI provides emergency funds to banks facing liquidity crises
The RBI acts as the lender of last resort by providing emergency liquidity to banks in distress to maintain financial stability.
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Which monetary policy tool involves the RBI buying or selling government securities to regulate money supply?
A · Open Market Operations
Open Market Operations refer to the RBI's buying and selling of government securities to control liquidity in the economy.
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Refer to the diagram below showing RBI’s balance sheet components. If the RBI increases the Statutory Liquidity Ratio (SLR), what immediate effect does it have on banks?
A · Banks must hold more liquid assets, reducing funds available for lending
An increase in SLR means banks must keep a higher percentage of their net demand and time liabilities in liquid assets, reducing lending capacity.
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Which of the following best defines a Non-Performing Asset (NPA)?
A · A loan on which the principal or interest remains overdue for more than 90 days
An NPA is a loan or advance where interest or principal remains unpaid for 90 days or more.
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Which of the following is a common cause of NPAs in Indian banks?
A · Poor credit appraisal and monitoring
Poor credit appraisal and monitoring lead to defaults, causing NPAs.
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Which government initiative aims to resolve NPAs by facilitating the sale of stressed assets to asset reconstruction companies?
A · Insolvency and Bankruptcy Code (IBC)
IBC provides a legal framework for insolvency resolution and asset reconstruction to tackle NPAs.
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What is the impact of high NPAs on the banking sector?
A · Reduced profitability and capital erosion
High NPAs reduce banks' profitability and erode capital, limiting their ability to lend.
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Refer to the table below showing NPA ratios of four banks. Which bank has the highest Gross NPA ratio?
C · Bank C
Bank C shows the highest Gross NPA ratio of 12.5% as per the table.
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Which of the following schemes is primarily aimed at promoting financial inclusion in India?
A · Pradhan Mantri Jan Dhan Yojana
PMJDY aims to provide universal access to banking facilities and financial services.
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Financial inclusion primarily aims to:
A · Provide affordable financial services to all sections of society
Financial inclusion seeks to ensure access to financial products and services at affordable costs to all individuals.
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Which of the following is a major challenge in achieving financial inclusion in rural India?
A · Lack of banking infrastructure and literacy
Rural areas often lack adequate banking infrastructure and financial literacy, hindering inclusion.
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Which technology has significantly boosted financial inclusion by enabling banking services through mobile phones?
A · Unified Payments Interface (UPI)
UPI allows instant money transfers and banking via mobile, enhancing financial inclusion.
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Refer to the graph below showing the percentage of population with bank accounts from 2015 to 2023. What trend does the graph indicate about financial inclusion?
A · Steady increase in bank account ownership
The graph shows a steady rise in the percentage of population with bank accounts, indicating improved financial inclusion.
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Which of the following is an example of a financial inclusion product designed for low-income groups?
A · Basic Savings Bank Deposit Account (BSBDA)
BSBDA offers no-frills banking with minimal charges, aimed at low-income customers.
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Which of the following RBI functions helps in controlling inflation by influencing interest rates?
A · Monetary policy through repo and reverse repo rates
The RBI uses repo and reverse repo rates as tools to influence liquidity and inflation.
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Which of the following statements about NPAs is correct?
B · Gross NPA ratio includes all loans overdue for 90 days or more
Gross NPA ratio includes all overdue loans; Net NPA ratio is after deducting provisions. Net NPA is always less than or equal to Gross NPA.
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Which of the following best explains the concept of financial literacy in the context of financial inclusion?
A · Ability to understand and effectively use various financial skills
Financial literacy means understanding financial products and making informed decisions.
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Which of the following RBI functions involves managing the country’s foreign exchange reserves?
A · Foreign exchange management
The RBI manages foreign exchange reserves to stabilize the currency and maintain external stability.
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Which of the following is an analytical question related to NPAs?
A · Analyzing the impact of rising NPAs on credit growth and economic development
Analyzing impact involves critical thinking and understanding broader economic consequences.
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Which of the following RBI functions is directly related to maintaining price stability?
A · Monetary policy implementation
Monetary policy aims to maintain price stability and control inflation.
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Which of the following financial inclusion initiatives specifically targets women empowerment through microfinance?
A · Self Help Groups (SHGs)
SHGs provide microfinance and credit access primarily to women in rural areas.
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Which of the following is a correct statement about the role of RBI in regulating NPAs?
A · RBI sets guidelines for classification and provisioning of NPAs
RBI issues prudential norms for identification and provisioning of NPAs to banks.
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Which of the following is the primary objective of Monetary Policy in India?
A · To control inflation and stabilize currency
Monetary policy primarily aims to control inflation and stabilize the currency by regulating money supply and interest rates.
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The Reserve Bank of India uses which of the following as a tool to control money supply?
A · Open Market Operations
Open Market Operations (OMO) involve buying and selling government securities to regulate money supply.
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Which of the following best describes the difference between expansionary and contractionary monetary policy?
A · Expansionary policy increases money supply; contractionary policy decreases it
Expansionary monetary policy increases money supply to stimulate growth, while contractionary policy reduces money supply to control inflation.
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If the RBI raises the Cash Reserve Ratio (CRR), what is the immediate effect on the banking system?
A · Banks have less money to lend, reducing money supply
An increase in CRR means banks must hold more funds with RBI, reducing their lending capacity and thus money supply.
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Refer to the diagram below showing the Money Supply (M) and Interest Rate (i) relationship. If the RBI wants to reduce inflation, which action is most appropriate?
A · Shift the money supply curve left by selling government securities
Selling government securities reduces money supply, shifting the curve left, increasing interest rates and controlling inflation.
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Which of the following is NOT a component of Fiscal Policy?
C · Monetary policy rate
Monetary policy rate is controlled by the central bank and is part of monetary policy, not fiscal policy.
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Which of the following best describes the objective of Fiscal Policy?
A · To influence economic activity through government spending and taxation
Fiscal policy uses government spending and taxation to influence economic growth and stability.
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If the government increases its expenditure without raising taxes, what is the likely immediate effect on the economy?
A · Increase in aggregate demand leading to economic growth
Increased government spending raises aggregate demand, stimulating economic growth.
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Which of the following statements about fiscal deficit is correct?
A · It is the excess of total expenditure over total receipts excluding borrowings
Fiscal deficit represents the gap between government's total expenditure and total receipts excluding borrowings.
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Refer to the table below showing India's fiscal deficit as a percentage of GDP over five years. In which year did the fiscal deficit increase the most compared to the previous year?
D · Year 4
Year 4 shows the largest increase in fiscal deficit percentage compared to Year 3 as per the table.
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Which of the following is a direct tax?
A · Income Tax
Income tax is a direct tax paid directly by individuals or organizations to the government.
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Which of the following taxes is levied on the manufacture of goods within the country?
A · Excise Duty
Excise duty is levied on the manufacture of goods within the country.
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Which of the following is a characteristic of Goods and Services Tax (GST)?
A · It is a comprehensive indirect tax on manufacture, sale, and consumption
GST is a comprehensive indirect tax levied on manufacture, sale, and consumption of goods and services.
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Which of the following taxes was subsumed into GST in India?
A · Central Excise Duty
Central Excise Duty was one of the indirect taxes subsumed under GST.
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Which of the following is NOT a component of the Union Budget?
C · Monetary Policy Statement
Monetary Policy Statement is released by RBI, not part of the Union Budget.
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The Union Budget is presented in the Indian Parliament by the Finance Minister on which date every year?
A · 1st February
Since 2017, the Union Budget is presented on 1st February every year.
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Which of the following statements about the Revenue Budget is correct?
A · It includes revenue receipts and revenue expenditure
Revenue Budget consists of revenue receipts and revenue expenditure of the government.
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Refer to the pie chart below showing the composition of Union Budget expenditure. Which sector receives the highest allocation?
A · Social Services
Social Services sector receives the highest allocation as shown in the pie chart.
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Which of the following taxes is levied on the sale of goods and services at every stage of production and distribution in India?
A · Goods and Services Tax (GST)
GST is a multi-stage tax levied on sale of goods and services at every stage of production and distribution.
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Which of the following GST components is levied by the Central Government on inter-state supply of goods and services?
A · Integrated GST (IGST)
IGST is levied by the Central Government on inter-state supply of goods and services.
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If a manufacturer sells goods worth Rs. 1,00,000 with a GST rate of 18%, what is the total GST amount collected?
A · Rs. 18,000
GST amount = 18% of Rs. 1,00,000 = Rs. 18,000.
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Which of the following taxes is a progressive tax in India?
A · Income Tax
Income tax is progressive as the rate increases with higher income slabs.
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Which of the following is an example of indirect tax?
A · Goods and Services Tax (GST)
GST is an indirect tax collected from consumers but paid to the government by businesses.
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Which of the following statements is correct regarding the Union Budget?
A · It is an annual statement of estimated receipts and expenditure of the government
The Union Budget is an annual financial statement of government receipts and expenditure.
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Which of the following is NOT a function of the Reserve Bank of India in monetary policy?
C · Fixing income tax slabs
Fixing income tax slabs is the government's function, not RBI's.
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Which of the following is an example of a fiscal policy instrument?
A · Government subsidies
Government subsidies are fiscal policy tools used to influence economic activity.
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Refer to the graph below showing inflation rate and repo rate over five years. What inference can be drawn about the RBI's monetary policy in Year 3 when inflation was high?
A · RBI increased repo rate to control inflation
When inflation rises, RBI typically increases repo rate to reduce money supply and control inflation.
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Which of the following is an analytical question about GST?
A · How does GST impact the prices of goods in different states?
Analyzing GST's impact on prices involves understanding its economic effects across states.
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Which of the following is NOT a benefit of GST implementation in India?
C · Increase in multiple indirect taxes
GST replaced multiple indirect taxes, reducing complexity and cascading effect.
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Which of the following taxes is levied on the import of goods into India?
A · Customs Duty
Customs duty is charged on goods imported into India.
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Which of the following is a correct statement about the Union Budget's Capital Budget?
A · It includes capital receipts and capital expenditure
Capital Budget comprises capital receipts (like loans) and capital expenditure (like investments).
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Refer to the table below showing tax revenue collection from different sources. Which source contributed the highest revenue in the given year?
B · Income Tax
Income Tax shows the highest revenue collection according to the table.
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Which of the following is a correct description of the repo rate?
A · The rate at which RBI lends money to commercial banks
Repo rate is the interest rate at which RBI lends short-term funds to commercial banks.
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Which of the following is an application-based question on Fiscal Policy?
A · If the government wants to reduce unemployment, it should increase spending
Increasing government spending can stimulate demand and reduce unemployment.
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Which of the following taxes is levied on services under GST?
A · Service Tax component of GST
GST subsumes service tax and levies tax on services under its framework.
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Which of the following is NOT true about the Union Budget process?
C · It is prepared by the Reserve Bank of India
The Union Budget is prepared by the Ministry of Finance, not RBI.
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Which of the following is a primary objective of monetary policy in India?
A · To regulate inflation
Monetary policy primarily aims to regulate inflation by controlling money supply and interest rates.
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The Reserve Bank of India uses which of the following as a tool to control liquidity in the economy?
A · Cash Reserve Ratio (CRR)
CRR is a monetary policy instrument used by RBI to control liquidity by mandating banks to keep a certain percentage of deposits as reserves.
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Which of the following best describes fiscal policy?
A · Government's use of taxation and expenditure to influence the economy
Fiscal policy involves government decisions on taxation and spending to manage economic growth and stability.
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Which of the following is NOT a component of the Union Budget?
C · Monetary Policy Statement
Monetary Policy Statement is issued by RBI, not a component of the Union Budget.
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Which tax was subsumed under GST in India?
A · Excise Duty
Excise Duty, along with several other indirect taxes, was subsumed under GST to create a unified tax system.
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Refer to the diagram below showing the relationship between inflation rate and interest rate set by RBI. If RBI increases the repo rate, what is the most likely immediate effect on inflation?
A · Inflation will decrease
Increasing repo rate makes borrowing costlier, reducing money supply and demand, thus lowering inflation.
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Which of the following is an example of expansionary fiscal policy?
A · Increasing government spending to boost demand
Expansionary fiscal policy involves increasing government spending or reducing taxes to stimulate economic growth.
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Which of the following taxes is a direct tax?
A · Income Tax
Income Tax is a direct tax paid directly by individuals or organizations to the government.
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Which of the following statements about the Union Budget is correct?
A · It is presented annually by the Finance Minister in Parliament
The Union Budget is presented annually by the Finance Minister and requires parliamentary approval.
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Which of the following is a key feature of the GST system implemented in India?
A · It is a destination-based tax
GST is a destination-based tax, meaning tax is collected where goods or services are consumed.
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Refer to the table below showing the Union Budget components for a fiscal year. If the government increases capital expenditure by 10%, what is the likely impact on fiscal deficit assuming revenue remains constant?
A · Fiscal deficit will increase
Increasing capital expenditure without increasing revenue leads to a higher fiscal deficit.
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Which of the following is a direct consequence of increasing the Cash Reserve Ratio (CRR) by the RBI?
A · Reduction in bank lending capacity
An increase in CRR means banks must hold more reserves, reducing the amount available for lending.
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Which of the following taxes is levied on the manufacture of goods within India before GST implementation?
A · Excise Duty
Excise Duty was levied on the manufacture of goods within India before GST subsumed it.
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Which of the following best explains the term 'fiscal deficit'?
A · The excess of total expenditure over total revenue excluding borrowings
Fiscal deficit occurs when government expenditure exceeds revenue receipts excluding borrowings.
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Which of the following is NOT an instrument of monetary policy?
A · Public Debt Management
Public Debt Management is related to fiscal policy, not monetary policy instruments.
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Which of the following taxes is a major source of revenue for the Indian government after GST implementation?
A · Goods and Services Tax (GST)
GST is a major indirect tax and a significant source of revenue for both central and state governments.
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Refer to the chart below showing GST revenue collection over four quarters. Which quarter shows the highest GST collection?
D · Q4
The chart indicates Q4 has the highest GST revenue collection among the four quarters.
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Which of the following is a characteristic of indirect taxes like GST?
A · They are collected from the consumer but paid to the government by the seller
Indirect taxes are collected from consumers but remitted to the government by producers or sellers.
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Which of the following statements correctly describes the relationship between monetary policy and inflation?
A · Tightening monetary policy generally helps reduce inflation
Tightening monetary policy (e.g., raising interest rates) reduces money supply and demand, thus controlling inflation.
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Which of the following is an example of a direct tax in India?
A · Corporate Tax
Corporate Tax is a direct tax levied on companies' profits.
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Which of the following is a major challenge in implementing GST in India?
A · Harmonizing tax rates across states
Harmonizing tax rates and procedures across diverse states is a key challenge in GST implementation.
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Which of the following is a fiscal policy measure to reduce unemployment?
A · Increasing government expenditure on infrastructure
Increasing government spending on infrastructure creates jobs and reduces unemployment.
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Which of the following is NOT a feature of the Union Budget?
C · It is prepared by the RBI
The Union Budget is prepared by the Ministry of Finance, not the RBI.
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Refer to the diagram below showing the flow of GST from manufacturer to consumer. Which stage represents the collection of CGST and SGST?
A · At the point of sale to the consumer within the same state
CGST and SGST are collected on intra-state sales at the point of final sale to the consumer.
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Which of the following is an analytical question related to fiscal policy?
A · How does an increase in government borrowing affect interest rates and private investment?
This question requires analysis of the crowding-out effect where government borrowing may raise interest rates and reduce private investment.
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Which of the following best explains the impact of increasing GST rates on consumer prices?
A · Consumer prices are likely to increase
Higher GST rates increase the tax component in prices, leading to higher consumer prices.
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Which of the following is a hard-level question on monetary policy?
A · How does an increase in the repo rate affect the exchange rate of the Indian Rupee?
This question requires understanding the complex relationship between interest rates and currency exchange rates.
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Which of the following taxes is levied on inter-state supply of goods under GST?
A · Integrated GST (IGST)
IGST is levied on inter-state supplies to ensure seamless flow of credit between states.
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Which of the following is an application-based question on taxation?
A · If a company earns ₹50 lakh profit, which tax is applicable on this income?
This question requires applying knowledge of corporate tax to a given profit figure.
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Which of the following is NOT a benefit of GST implementation in India?
C · Increase in multiple state-level taxes
GST replaced multiple state-level taxes with a unified system, reducing complexity.
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Which of the following is a fiscal policy tool used to control inflation?
A · Increasing taxes to reduce disposable income
Increasing taxes reduces disposable income, lowering demand and inflation.
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Which of the following is an example of an indirect tax?
A · Goods and Services Tax (GST)
GST is an indirect tax collected from consumers via sellers.
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Which of the following best describes the term 'repo rate'?
A · The rate at which RBI lends money to commercial banks
Repo rate is the interest rate at which RBI lends short-term funds to commercial banks.
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Which of the following is a hard-level question on GST?
A · How does GST input tax credit mechanism help in reducing tax cascading?
This question requires understanding the input tax credit mechanism and its effect on tax cascading.
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Which of the following fiscal policy actions would likely increase aggregate demand?
A · Reducing personal income tax rates
Reducing income tax increases disposable income, boosting consumption and aggregate demand.
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Which of the following is NOT true about the Union Budget process?
C · It is prepared by the RBI
The RBI does not prepare the Union Budget; it is prepared by the Ministry of Finance.

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