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MPPSC 2015 — Economy Questions with Answers

All 18 Economy previous-year questions from MPPSC 2015, each with the correct answer and a full explanation. Practise them as a free, timed mock test with instant scoring.

1. Q1.Government Schemes

   'Pradhan Mantri Jan-Dhan Yojana' has been launched for

   • a)To provide housing loans to poor people at relatively low interest rates.
   • b)To encourage self-help groups of women in backward areas.
   • c)To promote financial inclusion (Financial Inclusion) in the country.
   • d)To provide financial assistance to marginalized communities.

   Explanation: PMJDY, launched in 2014, is a national mission for financial inclusion that aims to give every household access to banking, credit, insurance and pension.

2. Q2.Public Finance

   A decrease in tax to GDP ratio of a country indicates which of the following?

   • a)1 only
   • b)2 only
   • c)Both 1 and 2
   • d)Neither 1 nor 2

   Explanation: A falling tax-to-GDP ratio typically reflects slowing economic activity, since lower incomes and output shrink the tax base; it does not directly indicate the equity of income distribution.

3. Q3.Industry

   In the 'Index of Eight Core Industries', which one of the following is given the highest weight?

   • a)Coal production
   • b)Electricity generation
   • c)Fertiliser production
   • d)Steel production

   Explanation: In the Index of Eight Core Industries (2004-05 base used at the time), electricity carried the highest weight, reflecting its dominant share in core-sector output.

4. Q4.Agriculture

   The Fair and Remunerative Price (FRP) of sugarcane is approved by the

   • a)Cabinet Committee on Economic Affairs
   • b)Commission for Agricultural Costs and Prices
   • c)Directorate of Marketing and Inspection, Ministry of Agriculture
   • d)Agricultural Produce Marketing Committee

   Explanation: The FRP of sugarcane is recommended by CACP but approved by the Cabinet Committee on Economic Affairs (CCEA).

5. Q5.International Institutions

   Which one of the following issues the 'Global Economic Prospects' report periodically?

   • a)Asian Development Bank
   • b)European Bank for Reconstruction and Development
   • c)U.S. Federal Reserve Bank
   • d)World Bank

   Explanation: The 'Global Economic Prospects' report is published periodically by the World Bank.

6. Q6.Monetary Policy

   When the Reserve Bank of India reduces the Statutory Liquidity Ratio by 50 basis points, which of the following is likely to happen?

   • a)India's GDP growth rate increases drastically
   • b)Foreign Institutional Investors may bring more capital into our country
   • c)Scheduled Commercial Banks may cut their lending rates
   • d)It may drastically reduce the liquidity to the banking system

   Explanation: Lowering the SLR frees up funds that banks were holding in liquid assets, increasing lendable resources, which can let scheduled commercial banks cut their lending rates.

7. Q7.Agriculture

   In India, markets in agricultural products are regulated under the

   • a)Essential Commodities Act, 1955
   • b)States' Agricultural Produce Marketing Committee Act
   • c)Agricultural Produce (Grading and Marking) Act, 1937
   • d)Food Products Order, 1956 and Meat and Food Products Order, 1973

   Explanation: Agricultural product markets (mandis) are regulated by the Agricultural Produce Market Committee (APMC) Acts enacted by individual States.

8. Q8.Indices

   Which of the following brings out the 'Consumer Price Index Number for Industrial Workers'?

   • a)Reserve Bank of India
   • b)Department of Economic Affairs
   • c)Labour Bureau
   • d)Department of Personnel and Training

   Explanation: The CPI for Industrial Workers (CPI-IW) is compiled and released by the Labour Bureau under the Ministry of Labour and Employment.

9. Q9.International Trade

   The terms 'Agreement on Agriculture', 'Agreement on the Application of Sanitary and Phytosanitary Measures' and 'Peace Clause' appear in the news frequently in the context of the affairs of the

   • a)Food and Agriculture Organization
   • b)United Nations Framework Convention on Climate Change
   • c)World Trade Organization
   • d)United Nations Environment Programme

   Explanation: These terms are all part of the World Trade Organization framework dealing with agricultural trade and food subsidies.

10. Q10.External Sector

    Convertibility of rupee implies

    • a)Being able to obtain gold in exchange for Rupee notes
    • b)Allowing the value of the Rupee to be determined by market forces
    • c)Allowing the Rupee to be freely converted into other currencies and other currencies into Rupee
    • d)Developing an international market for Rupee in India

    Explanation: Convertibility of the rupee means it can be freely exchanged for foreign currencies and vice versa without official restrictions.

11. Q11.Agriculture

    Consider the following statements: 1. The Accelerated Irrigation Benefits Programme was launched during 1996-97 to provide loan assistance to poor farmers. 2. The Command Area Development Programme was launched in 1974-75 for the development of water-use efficiency.

    • a)1 only
    • b)2 only
    • c)Both 1 and 2
    • d)Neither 1 nor 2

    Explanation: AIBP (1996-97) gave central assistance to complete irrigation projects, not loans to poor farmers; the Command Area Development Programme (1974-75) correctly aimed at improving water-use efficiency.

12. Q12.Banking

    'Basel III Accord' or simply 'Basel III', often seen in the news, seeks to

    • a)attempts to develop national strategies for the conservation and sustainable use of biodiversity.
    • b)attempts to improve the banking sector's ability to cope with financial and economic stress and to improve risk management.
    • c)attempts to reduce greenhouse gas emissions but places a relatively heavy burden on developed countries.
    • d)attempts to transfer technology from developed to poorer countries so that they can use harmless chemicals instead of chlorofluorocarbons used in refrigeration.

    Explanation: Basel III is a global banking regulatory framework that strengthens banks' capital and liquidity to better withstand financial and economic stress and improve risk management.

13. Q13.National Income

    With reference to Indian economy, consider the following statements: 1. The rate of growth of Real Gross Domestic Product has steadily increased in the last decade. 2. The Gross Domestic Product at market prices (in rupees) has steadily increased in the last decade.

    • a)1 only
    • b)2 only
    • c)Both 1 and 2
    • d)Neither 1 nor 2

    Explanation: The growth rate of real GDP fluctuated rather than steadily rising over the decade, while GDP at market prices in rupees did rise steadily, so only statement 2 is correct.

14. Q14.Monetary Policy

    With reference to Indian economy, consider the following: 1. Bank rate; 2. Open market operations; 3. Public debt; 4. Public revenue. Which of the above is/are component/components of Monetary Policy?

    • a)1 only
    • b)2, 3 and 4
    • c)1 and 2
    • d)1, 3 and 4

    Explanation: Bank rate and open market operations are instruments of monetary policy, whereas public debt and public revenue belong to fiscal policy.

15. Q15.Monetary Policy

    With reference to inflation in India, which of the following statements is correct?

    • a)Controlling inflation in India is the sole responsibility of the Government of India.
    • b)The Reserve Bank of India has no role in controlling inflation.
    • c)Decreased money circulation helps in controlling inflation.
    • d)Increased money circulation helps in controlling inflation.

    Explanation: Reducing the money supply in circulation curbs demand-pull inflation, which is why decreased money circulation helps control inflation.

16. Q16.Growth Theory

    The substitution of steel for wooden ploughs in agricultural production is an example of

    • a)Labour-augmenting technological progress
    • b)Capital-augmenting technological progress
    • c)Capital-reducing technological progress
    • d)None of the above

    Explanation: Replacing wooden ploughs with more durable, productive steel ploughs raises the productivity of capital, making it capital-augmenting technological progress.

17. Q17.External Sector

    The problem of international liquidity is related to the non-availability of

    • a)Goods and services
    • b)Gold and silver
    • c)Dollar and other hard currencies
    • d)Exportable surplus

    Explanation: International liquidity refers to the availability of internationally accepted means of payment, primarily dollars and other hard currencies, to settle external transactions.

18. Q18.Agriculture

    With reference to 'Initiative for Nutritional Security through Intensive Millets Promotion', which of the following statements is/are correct? 1. This initiative aims to demonstrate the improved production and post-harvest technologies, and to demonstrate value addition techniques, in an integrated manner, with cluster approach. 2. Poor, small, marginal and tribal farmers have a larger stake in this scheme. 3. An important objective of the scheme is to encourage the consumption of millets by the urban population.

    • a)1 only
    • b)2 and 3 only
    • c)1 and 2 only
    • d)1, 2 and 3

    Explanation: The millets promotion initiative demonstrates improved production and value-addition technologies through a cluster approach and chiefly benefits poor, small, marginal and tribal farmers; promoting urban consumption was not its objective.