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Quizzes > Quizzes for Business > Finance

Take the Indian Economy Knowledge Quiz

Evaluate Your Knowledge of India's Economic System

Difficulty: Moderate
Questions: 20
Learning OutcomesStudy Material
Colorful paper art depicting elements related to Indian Economy Knowledge Quiz.

Are you ready to explore an engaging Indian economy quiz designed for students and professionals alike? Joanna Weib invites you to test your understanding of GDP, fiscal strategies, and economic reforms in this dynamic Indian economy test. Participants will gain sharper insights into market trends and policy impacts, boosting their analytical skills. This interactive quiz can be freely modified in our intuitive editor to match your learning goals. To further expand your knowledge, check out our Indian General Knowledge Quiz, Knowledge Assessment Quiz , and browse more quizzes.

Easy
Which sector contributes the largest share to India's GDP?
Agriculture
Industry
Services
Mining
The services sector dominates India's economy and accounts for the largest portion of GDP, typically over half of total output.
What does FDI stand for?
Fixed Deposit Instrument
Foreign Direct Investment
Foreign Domestic Investment
Federal Development Income
FDI stands for Foreign Direct Investment, which refers to investments made by a foreign entity directly into productive assets in another country.
Which institution is primarily responsible for setting India's monetary policy?
Reserve Bank of India
Securities and Exchange Board of India
Ministry of Finance
World Bank
The Reserve Bank of India is the central bank and is responsible for formulating and implementing monetary policy in India.
Which tool is directly related to fiscal policy?
Government spending and taxation
Repo rate adjustments
Open market operations
Reserve requirements
Fiscal policy involves government decisions on spending and taxation, whereas tools like repo rate and open market operations are part of monetary policy.
Which indicator measures the general rise in prices over time?
Inflation rate
Unemployment rate
GDP growth rate
Balance of trade
The inflation rate measures how the general level of prices for goods and services rises over time, reducing purchasing power.
Medium
As of recent data, where does India rank among the world's largest economies by nominal GDP?
3rd
5th
7th
10th
By nominal GDP, India is ranked as the fifth largest economy in the world, behind the US, China, Japan, and Germany.
Under India's inflation-targeting framework, what is the RBI's target inflation rate?
2%±1%
4%±2%
6%±1%
5%±2%
The RBI's framework aims to maintain consumer price inflation at 4% with a tolerance band of two percentage points on either side.
Which act mandates the government's fiscal deficit targets as a percentage of GDP?
Income Tax Act
RBI Act
Fiscal Responsibility and Budget Management Act
Companies Act
The Fiscal Responsibility and Budget Management (FRBM) Act requires the government to adhere to specified deficit targets relative to GDP.
What is the guaranteed minimum employment days per household under MGNREGA?
60 days
100 days
180 days
200 days
MGNREGA guarantees a minimum of 100 days of paid manual work per rural household each year to bolster rural incomes.
The 'Make in India' initiative primarily aims to:
Increase agricultural output
Promote domestic manufacturing
Expand service exports
Stabilize the rupee
Make in India focuses on encouraging companies to manufacture their products in India and invites investment in the manufacturing sector.
Which demographic term refers to a large working-age population relative to dependents?
Demographic trap
Dependency ratio
Population momentum
Demographic dividend
A demographic dividend occurs when the proportion of working-age population is high relative to dependents, potentially boosting economic growth.
Which service category accounts for the largest share of India's service exports?
Tourism
IT services
Transport services
Education services
IT and software services are the leading component of India's service exports, contributing the highest share.
Which type of overseas investment accounts for the largest net inflow into India?
Portfolio investment
External commercial borrowings
Foreign direct investment
Grants and aid
Foreign direct investment has consistently been the largest net inflow of foreign capital into India, surpassing other forms of external financing.
India is a member of which regional trade agreement?
South Asian Free Trade Area
NAFTA
ASEAN Free Trade Area
Mercosur
India participates in SAFTA, the South Asian Free Trade Area, alongside neighboring countries to promote regional trade.
The introduction of GST in India led to:
Elimination of income tax
Increased multiple state-level taxes
A unified tax structure across states
Elimination of customs duties
The Goods and Services Tax replaced various indirect taxes and created a single, unified tax regime across all states in India.
Hard
What is the primary effect of a reduction in the RBI's repo rate?
Increase in bank lending
Higher tax revenue
Decrease in government spending
Reduction in exports
A lower repo rate reduces banks' borrowing costs from the central bank, encouraging them to lend more to businesses and consumers.
The Production Linked Incentive (PLI) scheme in India is designed to:
Expand service sector jobs
Boost domestic manufacturing in targeted sectors
Subsidize petroleum imports
Expand agricultural exports
The PLI scheme offers financial incentives to firms in specific sectors to increase domestic production and reduce import reliance.
A persistent current account deficit in India is likely to put downward pressure on:
Inflation rate
Fiscal deficit
Interest rates
Rupee exchange rate
A sustained current account deficit often leads to higher demand for foreign currency, causing the domestic currency to depreciate.
Among fiscal policy instruments, which has the highest Keynesian multiplier effect on GDP?
Tax rebates to individuals
Government expenditure on infrastructure
Subsidies to corporations
Increase in public debt interest payments
Direct government spending, especially on infrastructure, typically generates larger immediate increases in aggregate demand compared to tax or subsidy measures.
According to the Balassa-Samuelson effect, countries with higher productivity growth in tradable sectors will tend to have:
Lower nominal GDP growth
Reduced capital inflows
Appreciating real exchange rates
Higher unemployment rates
Productivity gains in tradable goods raise wages and non-tradable prices, leading to an appreciation of the real exchange rate.
0
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Learning Outcomes

  1. Analyse key indicators of India's economic growth and performance
  2. Identify major sectors and their contributions to GDP
  3. Evaluate fiscal and monetary policies shaping India's economy
  4. Apply economic reform concepts to contemporary issues
  5. Demonstrate understanding of labor market and demographic trends
  6. Master the impact of global trade on India's economic development

Cheat Sheet

  1. India's GDP Composition - Dive into the breakdown of GDP by sector and discover why services dominate at around 54.7%, with industry and agriculture trailing at 27.6% and 17.7% respectively. Understanding these proportions gives insight into where the economy thrives and where growth potential lies. Statisticstimes
  2. Services Sector Significance - The services sector not only leads in GDP contribution but also attracts the highest FDI inflows, underscoring its pivotal role in driving economic expansion. Spotting these investment trends helps you see why businesses flock to finance, IT, tourism, and more. Livemint
  3. Key Economic Indicators - Keep an eye on the Purchasing Managers' Index (PMI), which hit a robust 60.0 in April 2025, signaling strong business activity and optimism. Tracking such metrics lets you gauge whether factories and services are humming along or hitting a slowdown. Reuters
  4. Fiscal Policy Effects - Government spending and tax decisions can turbocharge or throttle economic performance - think tax cuts boosting consumer wallets or infrastructure spending kicking off construction booms. Grasping these levers clarifies how policy shapes daily life and business growth. Reuters
  5. Monetary Policy Role - The Reserve Bank of India adjusts interest rates to tame inflation or spark investment - recent rate cuts aim to make borrowing cheaper and fuel growth. Watching RBI decisions helps you predict credit costs for everything from home loans to business expansions. Reuters
  6. Economic Reforms - Landmark reforms like the Goods and Services Tax (GST) have simplified India's complex tax web, boosting compliance and reducing cascading levies. Understanding these changes shows how policy can streamline business operations and spur formalization. Wikipedia: Economy of India
  7. Labor Market Trends - A large chunk of India's workforce operates in the unorganized sector, affecting job security and social protections. Recognizing this split helps you appreciate the challenges and reforms needed to uplift informal workers. Wikipedia: Economy of India
  8. Demographic Dynamics - India's youthful population and accelerating urbanization shape labor supply, consumption patterns, and future economic demand. Analyzing these trends reveals why sectors like education, housing, and tech are poised for growth. Wikipedia: Economy of India
  9. Global Trade Impact - International trade policies and world market conditions directly influence India's export and import balances - shifts in tariffs or demand abroad can ripple through domestic industries. Monitoring these linkages shows how global events can boost or hinder growth. Reuters
  10. Staying Informed - The economic landscape is always evolving, so follow trusted news outlets and official releases to catch policy shifts, market reactions, and global trends. Building this habit ensures you're never caught off guard by surprises in India's economy. Reuters
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