Indian Economy & Development – Basics of Indian Economy
Assam Public Service Commission (APSC)
Combined Competitive Examination (CCE) – Preliminary Examination
General Studies Paper I (Objective, 200 Marks)
Topic: Indian Economy & Development
Sub-Topic: Basics of Indian Economy
Basics of Indian Economy – Multiple Choice Questions (MCQs) with Answers & Explanations
Q1. The Indian economy is best described as:
A. Capitalist economy
B. Socialist economy
C. Mixed economy
D. Command economy
Correct Answer: C
Explanation:
India follows a mixed economy where both the public and private sectors coexist, combining features of capitalism and socialism.
Q2. Which sector contributes the largest share to India’s GDP at present?
A. Primary sector
B. Secondary sector
C. Tertiary sector
D. Quaternary sector
Correct Answer: C
Explanation:
The tertiary (services) sector—including banking, transport, IT, and trade—contributes the highest share to India’s GDP.
Q3. GDP stands for:
A. Gross Domestic Production
B. Gross Development Product
C. Gross Domestic Product
D. General Domestic Product
Correct Answer: C
Explanation:
GDP measures the total value of all final goods and services produced within a country in a given year.
Q4. Which sector includes agriculture, forestry, fishing, and mining?
A. Primary sector
B. Secondary sector
C. Tertiary sector
D. Service sector
Correct Answer: A
Explanation:
The primary sector involves activities directly dependent on natural resources.
Q5. The secondary sector mainly deals with:
A. Raw material extraction
B. Manufacturing and processing
C. Trade and commerce
D. Social services
Correct Answer: B
Explanation:
The secondary sector converts raw materials into finished or semi-finished goods through manufacturing.
Q6. Per capita income is calculated as:
A. GDP ÷ total area
B. GDP ÷ total population
C. National income ÷ working population
D. National income ÷ GDP
Correct Answer: B
Explanation:
Per capita income shows average income per person, calculated by dividing GDP by total population.
Q7. Which institution estimates National Income in India?
A. Planning Commission
B. NITI Aayog
C. Central Statistical Office (CSO)
D. Reserve Bank of India
Correct Answer: C
Explanation:
The Central Statistical Office (CSO), under the Ministry of Statistics, estimates national income figures.
Q8. Inflation refers to:
A. Decrease in prices
B. Increase in production
C. Sustained rise in general price level
D. Decline in purchasing power only
Correct Answer: C
Explanation:
Inflation means a continuous increase in the general price level, reducing purchasing power.
Q9. Which index is commonly used to measure inflation in India?
A. Wholesale Price Index (WPI)
B. Consumer Price Index (CPI)
C. Sensex
D. GDP Deflator
Correct Answer: B
Explanation:
CPI is the main indicator of inflation, especially for policy decisions.
Q10. Deflation refers to:
A. Rise in money supply
B. Fall in prices
C. Rise in demand
D. Increase in employment
Correct Answer: B
Explanation:
Deflation is a persistent fall in general price levels, often linked with economic slowdown.
Q11. Fiscal policy is related to:
A. Banking regulation
B. Government expenditure and taxation
C. Money supply
D. Foreign exchange
Correct Answer: B
Explanation:
Fiscal policy involves government spending, taxation, and borrowing to manage the economy.
Q12. Monetary policy in India is formulated by:
A. Ministry of Finance
B. Parliament
C. RBI
D. NITI Aayog
Correct Answer: C
Explanation:
The Reserve Bank of India controls monetary policy to regulate money supply and credit.
Q13. Which tool is NOT used in monetary policy?
A. Repo rate
B. Reverse repo rate
C. Cash Reserve Ratio
D. Budget deficit
Correct Answer: D
Explanation:
Budget deficit is related to fiscal policy, not monetary policy.
Q14. Unemployment where workers are engaged but productivity is low is called:
A. Seasonal unemployment
B. Open unemployment
C. Disguised unemployment
D. Cyclical unemployment
Correct Answer: C
Explanation:
Disguised unemployment is common in agriculture where more workers are employed than required.
Q15. Poverty line in India is determined based on:
A. Income only
B. Consumption expenditure
C. Asset ownership
D. Employment status
Correct Answer: B
Explanation:
India uses consumption expenditure to determine the poverty line.
Q16. Which sector employs the largest workforce in India?
A. Primary sector
B. Secondary sector
C. Tertiary sector
D. IT sector
Correct Answer: A
Explanation:
Despite lower GDP share, the primary sector employs the largest workforce.
Q17. Economic growth refers to:
A. Increase in national income
B. Increase in per capita income
C. Increase in GDP over time
D. Reduction in poverty
Correct Answer: C
Explanation:
Economic growth is measured by a sustained increase in real GDP.
Q18. Economic development includes:
A. Growth only
B. Growth with structural changes
C. Growth with social and human development
D. Industrial growth only
Correct Answer: C
Explanation:
Economic development is broader than growth and includes health, education, and living standards.
Q19. Which sector provides services like transport, banking, and education?
A. Primary
B. Secondary
C. Tertiary
D. Quinary
Correct Answer: C
Explanation:
The tertiary sector provides essential and commercial services.
Q20. The term ‘Make in India’ mainly aims to:
A. Boost agriculture
B. Promote manufacturing
C. Increase exports only
D. Control inflation
Correct Answer: B
Explanation:
Make in India focuses on strengthening the manufacturing sector.
Q21. Which indicator best reflects the standard of living?
A. GDP
B. Per capita income
C. Fiscal deficit
D. Foreign exchange reserves
Correct Answer: B
Explanation:
Per capita income reflects average income and living standards.
Q22. Which of the following is a direct tax?
A. GST
B. Customs duty
C. Income tax
D. Excise duty
Correct Answer: C
Explanation:
Income tax is a direct tax borne directly by the taxpayer.
Q23. Indirect taxes are characterized by:
A. Progressive nature
B. Direct burden on rich
C. Burden transferable to others
D. No impact on prices
Correct Answer: C
Explanation:
Indirect taxes like GST can be passed on to consumers.
Q24. Budget deficit refers to:
A. Excess of revenue over expenditure
B. Excess of expenditure over revenue
C. Equal revenue and expenditure
D. External debt
Correct Answer: B
Explanation:
Budget deficit occurs when government expenditure exceeds revenue.
Q25. Which sector is also called the service sector?
A. Primary
B. Secondary
C. Tertiary
D. Public sector
Correct Answer: C
Explanation:
The tertiary sector is commonly known as the service sector.
Q26. Liberalization in India began in:
A. 1985
B. 1990
C. 1991
D. 1995
Correct Answer: C
Explanation:
India initiated economic reforms and liberalization in 1991.
Q27. Privatization refers to:
A. Expansion of public sector
B. Transfer of ownership to private sector
C. Foreign trade policy
D. Nationalization
Correct Answer: B
Explanation:
Privatization involves reducing government control and encouraging private ownership.
Q28. Globalization mainly refers to:
A. Regional trade
B. International integration of economies
C. Nationalization of industries
D. Trade restrictions
Correct Answer: B
Explanation:
Globalization connects economies through trade, investment, and technology flows.
Q29. Which indicator measures inequality in income distribution?
A. CPI
B. GDP
C. Gini coefficient
D. HDI
Correct Answer: C
Explanation:
The Gini coefficient measures income inequality.
Q30. The primary objective of economic planning in India has been:
A. Profit maximization
B. Rapid industrialization only
C. Economic growth with social justice
D. Export promotion
Correct Answer: C
Explanation:
India’s economic planning emphasizes growth with equity and social justice.
✅ APSC Prelims Smart Tip
For Basics of Indian Economy, focus on:
- Sectoral composition
- GDP, inflation, unemployment
- Fiscal vs monetary policy
- Growth vs development
- Basic economic reforms
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Basics of Indian Economy MCQs APSC
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Indian economy prelims questions
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GDP inflation unemployment MCQs
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Fiscal and monetary policy MCQs
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Economic reforms 1991 MCQs
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Indian economy GS Paper I APSC
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Sectoral composition economy MCQs