BPSC 2020 — Economy Questions with Answers
All 27 Economy previous-year questions from BPSC 2020, each with the correct answer and a full explanation. Practise them as a free, timed mock test with instant scoring.
Practice Economy as a timed test →- Q1.Energy
Which of the following states is the largest producer of solar energy in India?
- a)Telangana
- b)Karnataka
- c)Andhra Pradesh
- d)Rajasthan
- e)None of the above / More than one of the above
- Q2.Indices and Reports
Which of the following institutions releases the Index of Industrial Production to measure the achievement of the industrial sector in India?
- a)National Sample Survey Office (NSSO)
- b)Reserve Bank of India (RBI)
- c)Central Statistical Office (CSO)
- d)Indian Statistical Institute (ISI)
- e)None of the above / More than one of the above
- Q3.Indices and Reports
According to the 2020 report on Ease of Doing Business, India has improved its rank, which is
- a)from 77th to 63rd rank of the previous year
- b)from 130th to 100th rank of the previous year
- c)from 100th to 77th rank of the previous year
- d)from 77th to 67th rank of the previous year
- e)None of the above / More than one of the above
- Q4.Agriculture
What is the credit target set for the year 2020-21 to increase the flow of institutional agricultural credit in India's Union Budget?
- a)₹ 10 lakh crore
- b)₹ 13.5 lakh crore
- c)₹ 15 lakh crore
- d)₹ 16.5 lakh crore
- e)None of the above / More than one of the above
- Q5.Government Schemes
The objective of PM-KUSUM scheme is
- a)to reduce farmers' dependence on monsoon for irrigation
- b)to reduce farmers' dependence on moneylenders for credit
- c)promotion of floriculture in India
- d)to end farmers' dependence on diesel and kerosene and connect pump sets to solar energy
- e)None of the above / More than one of the above
- Q6.Banking and Finance
Which of the following commercial banks of India is included in the top 100 banks of the world?
- a)ICICI Bank
- b)State Bank of India
- c)HDFC Bank
- d)Kotak Mahindra Bank
- e)None of the above / More than one of the above
- Q7.Government Schemes
The Government of India has announced a new scheme 'NIRVIK' in the 2020-21 budget. Which of the following sectors of the economy will benefit from this scheme?
- a)Agriculture sector
- b)Industrial sector
- c)Health sector
- d)Export sector
- e)None of the above / More than one of the above
- Q8.Government Schemes
Which of the following is NOT an objective of food management in India?
- a)Distribution of food grains.
- b)Procurement of food grains.
- c)Maintenance of buffer stock of food grains.
- d)Export of food grains.
- e)None of the above / More than one of the above.
- Q9.Public Finance — Deficit Financing
Revenue deficit in India means that:
- a)The Government of India needs to borrow to finance those expenditures which create capital assets.
- b)The Government of India needs to borrow to finance those expenditures which do not create capital assets.
- c)The Government of India needs to borrow from the Reserve Bank of India against government securities.
- d)The Government of India needs to borrow from international financial institutions.
- e)None of the above / More than one of the above.
- Q10.International Trade
Which of the following countries was India's largest trading partner in 2019-20?
- a)United States of America.
- b)China.
- c)United Arab Emirates.
- d)Saudi Arabia.
- e)None of the above / More than one of the above.
- Q11.Infrastructure
Bharatmala Pariyojana is related to which of the following infrastructure sectors in India?
- a)Telecommunication sector.
- b)Railways.
- c)Road infrastructure.
- d)Port sector.
- e)None of the above / More than one of the above.
- Q12.Indices and Reports
Which of the following ranked first in the Human Capital Index, 2020?
- a)Japan
- b)South Korea
- c)Singapore
- d)Hong Kong
- e)None of the above / More than one of the above
- Q13.Banking and Finance
Which private sector bank has launched the 'e-Kisan Dhan' app for farmers?
- a)Axis Bank
- b)HDFC Bank
- c)ICICI Bank
- d)Kotak Mahindra Bank
- e)None of the above / More than one of the above
- Q14.Government Budgeting
Along with the Budget, the Finance Minister also places other documents before the Parliament which include 'The Macro-Economic Framework Statement'. The aforesaid document is presented because this is mandated by
- a)Long-standing parliamentary convention
- b)Article 112 and Article 110(1) of the Constitution of India
- c)Article 113 of the Constitution of India
- d)Provisions of the Fiscal Responsibility and Budget Management Act, 2003
Explanation: The Macro-Economic Framework Statement is one of the documents mandated by the Fiscal Responsibility and Budget Management (FRBM) Act, 2003 to be laid before Parliament with the Budget.
- Q15.International Economic Institutions
'Gold Tranche' (Reserve Tranche) refers to
- a)a loan system of the World Bank
- b)one of the operations of a Central Bank
- c)a credit system granted by WTO to its members
- d)a credit system granted by IMF to its members
Explanation: The Gold Tranche (Reserve Tranche) is the portion of a member's IMF quota that it can draw automatically without conditions, hence a credit facility of the IMF.
- Q16.International Finance
If another global financial crisis happens in the near future, which of the following actions/policies are most likely to give some immunity to India?
- a)1 only
- b)1 and 2 only
- c)2 only
- d)1, 2 and 3
Explanation: Reducing reliance on short-term foreign borrowings insulates India from sudden capital flight; opening more to foreign banks and full capital account convertibility would increase vulnerability, so only statement 1 gives immunity.
- Q17.Money and Banking
If you withdraw Rs. 1,00,000 in cash from your Demand Deposit Account at your bank, the immediate effect on aggregate money supply in the economy will be
- a)To reduce it by Rs. 1,00,000
- b)To increase it by Rs. 1,00,000
- c)To increase it by more than Rs. 1,00,000
- d)To leave it unchanged
Explanation: Both currency with the public and demand deposits are components of money supply (M1), so converting a deposit into cash merely shifts the form of money without changing the aggregate money supply.
- Q18.External Sector
With reference to Foreign Direct Investment in India, which one of the following is considered its major characteristic?
- a)It is the investment through capital instruments essentially in a listed company.
- b)It is a largely non-debt creating capital flow.
- c)It is the investment which involves debt-servicing.
- d)It is the investment made by foreign institutional investors in the Government securities.
Explanation: FDI is a long-term, largely non-debt-creating capital flow, distinguishing it from portfolio and debt flows.
- Q19.External Sector
With reference to the international trade of India at present, which of the following statements is/are correct?
- a)1 and 2 only
- b)2 and 4 only
- c)3 only
- d)1, 3 and 4 only
Explanation: India has a merchandise trade deficit, a services trade surplus and an overall current account deficit, so statements 1, 3 and 4 are correct; imports of iron, steel and machinery have not consistently decreased, so statement 2 is wrong.
- Q20.Commodities
The term 'West Texas Intermediate', sometimes found in news, refers to a grade of
- a)Crude oil
- b)Bullion
- c)Rare earth elements
- d)Uranium
Explanation: West Texas Intermediate (WTI) is a benchmark grade of crude oil used in pricing.
- Q21.Public Finance
In the context of the Indian economy, non-financial debt includes which of the following?
- a)1 only
- b)1 and 2 only
- c)3 only
- d)1, 2 and 3
Explanation: Non-financial debt covers borrowings by households, businesses and government, so housing loans, credit card dues and Treasury bills are all included.
- Q22.WTO
With reference to Trade-Related Investment Measures (TRIMS), which of the following statements is/are correct?
- a)1 and 2 only
- b)2 only
- c)1 and 3 only
- d)1, 2 and 3
Explanation: TRIMS prohibits quantitative import restrictions on foreign investors and is not directly about regulating foreign investment itself; it applies only to trade in goods, not services, so statement 2 is wrong and the answer is 1 and 3 only.
- Q23.Monetary Policy
If the RBI decides to adopt an expansionist monetary policy, which of the following would it not do?
- a)1 and 2 only
- b)2 only
- c)1 and 3 only
- d)1, 2 and 3
Explanation: An expansionist policy involves cutting the SLR, bank rate and repo rate, so the RBI would do 1 and 3; increasing the MSF rate is contractionary, so the action it would NOT do is statement 2 only.
- Q24.Indian Economic Development
With reference to the Indian economy after the 1991 economic liberalization, consider the following statements. Which of the statements given above is/are correct?
- a)1 and 2 only
- b)3 and 4 only
- c)3 only
- d)1, 2 and 4 only
Explanation: After 1991 the rural non-farm economy grew while the rate of rural employment growth declined, so statements 3 and 4 are correct; worker productivity rose in both areas and the rural share of the workforce did not steadily increase, so 1 and 2 are wrong.
- Q25.Banking
Consider the following statements about cooperative banks. Which of the statements given above is/are correct?
- a)1 only
- b)2 only
- c)Both 1 and 2
- d)Neither 1 nor 2
Explanation: DCCBs do not deliver more short-term agricultural credit than commercial banks, so statement 1 is wrong, but financing Primary Agricultural Credit Societies is indeed a key DCCB function, so only statement 2 is correct.
- Q26.Insurance
In India, under cyber insurance for individuals, which of the following benefits are generally covered, in addition to payment for the loss of funds and other benefits?
- a)1, 2 and 4 only
- b)1, 3 and 4 only
- c)2 and 3 only
- d)1, 2, 3 and 4
Explanation: Cyber insurance typically covers system restoration, consultant costs during cyber extortion and legal defence against third-party suits, but not the cost of a brand-new computer for physical damage, so statement 2 is excluded and the answer is 1, 3 and 4 only.
- Q27.Agriculture
In India, which of the following can be considered as public investment in agriculture?
- a)1, 2 and 5 only
- b)1, 2, 4 and 5 only
- c)2, 3 and 6 only
- d)1, 2, 3, 4, 5 and 6
Explanation: Public investment in agriculture creates durable assets and capacity, such as computerizing PACS, developing social capital and building cold storage; MSP, free electricity and loan waivers are subsidies/revenue expenditure, so the answer is 2, 3 and 6 only.
BPSC 2020 — other subjects
Economy — other years
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