Part-2: Fundamentals of Indian Economy and Planning MCQ for Practice

Part-2: Fundamentals of Indian Economy and Planning MCQ for Practice
: An Economy is the process of making economic decisions on how a country uses its resources to produce and distribute goods and services. The Indian Economy, once considered underdeveloped, has now transitioned into a developing economy. It is commonly referred to as a mixed economy.

Here are some important multiple-choice questions (MCQs) on the Indian Economy to assess your comprehension of the subject. The answers are provided for your convenience.

Part-2: Fundamentals of Indian Economy and Planning MCQ for Practice

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1. National Development Council was set up in:
(a) 1948
(b) 1950
(c) 1951
(d) 1952

Answer: (d) 1952

2. Economic Planning is a subject: [Asset Grade 1991]
(a) in the Union List
(b) in the State List
(c) in the Concurrent List
(d) unspecified in any special list

Answer: (a) in the Union List

3. For internal financing of Five Year Plans, the government depends on: [NDA 1991]

(a) taxation only

(b) taxation and public borrowing

(d) taxation, public borrowing and deficit financing

Answer: (a) taxation only

4. The National Development Council gets its administrative support from:
(a) Planning Commission
(b) Finance Commission
(c) Administrative Reforms Commission
(d) Sarkaria Commission

Answer: (a) Planning Commission

5. The Five Year Plans of India intend to develop the country industrially through: [NDA 1991]
(a) the public sector
(b) the private sector
(c) the public, private, joint and Cooperative sectors
(d) increasing collaboration with non-resident Indians

Answer: (c) the public, private, joint and Cooperative sectors

6. The Planning Commission is: [UP PCS 1994]
(a) a Ministry
(b) a Government department
(c) an Advisory body
(d) an Autonomous Corporation

Answer: (c) an Advisory body

7. Which of the following statements is correct? [AAO 1993]
(a) Planning Commission is a constitutional body
(b) The Prime Minister is the Chairman of the Planning Commission
(c) The Minister of Planning is always necessarily the Deputy Chairman of Planning Commission
(d) The draft plan is prepared by the National Development Council

Answer: (b) The Prime Minister is the Chairman of the Planning Commission

8. The principal reason why national economic planning is still being pursued inspite of embracing a market economy since 1991 is that: [IAS 1994]
(a) the vast quantity of capital already deployed in the public sector needs to be nurtured
(b) the market economy is mainly confined to industry and commerce and central planning in agriculture is necessary
(c) it is a constitutional requirement
(d) Five Year Plans can continue to provide a long-term perspective to the economy in market friendly fashions

Answer: (d) Five Year Plans can continue to provide a long-term perspective to the economy in market friendly fashions

9. ‘Take off stage’ in an economy means: [CBI 1990]
(a) steady growth begins
(b) economy is stagnant
(c) economy is about to collapse
(d) all controls are removed

Answer: (a) steady growth begins

10. Planning in India derives its objectives from:
(a) Fundamental Rights
(b) Directive Principles of State policy
(c) Fundamental Duties
(d) Preamble

Answer: (b) Directive Principles of State policy

Part-2: Fundamentals of Indian Economy and Planning MCQ for Practice

11. 70% of working population of India is engaged in:
(a) public sector
(b) primary sector
(c) secondary sector
(d) tertiary sector

Answer: (b) primary sector

12. Economic survey is published by: [IAS 1998]
(a) Ministry of Finance
(b) Planning Commission
(c) Govt. of India
(d) Indian Statistical Institute

Answer: (a) Ministry of Finance

13. Who is called the ‘Father of Economics’?
(a) Max Muller
(b) Karl Marx
(c) Adam Smith
(d) None of these

Answer: (c) Adam Smith

14. The concept of Five Year Plans in India was introduced by
(a) Lord Mountbatten
(b) Jawaharlal Nehru
(c) Indira Gandhi
(d) Lal Bahadur Shastri

Answer: (b) Jawaharlal Nehru

15. India has: [CDS 1992]
(a) Socialistic economy
(b) Gandhian economy
(c) Mixed economy
(d) Free economy

Answer: (c) Mixed economy

16. India opted for ‘Mixed Economy’ in:
(a) Framing of the Constitution
(b) Second Five Year Plan
(c) Industrial Policy of 1948
(d) None of the above

Answer: (c) Industrial Policy of 1948

17. Mixed economy means an economy where [CDS 2009]
(a) both agriculture and industry are equally promoted by the state
(b) there is co-existence of public sector along with private sector
(c) there is importance of small scale industries along with heavy industries
(d) economy is controlled by military as well as civilian rulers

Answer: (b) there is co-existence of public sector along with private sector

18. India’s economic planning CANNOT be said to be : [NDA 2002]
(a) indicative
(b) imperative
(c) limited
(d) democratic

Answer: (b) imperative

19. Which of the following could be said to have prevented the ‘trickle down’ effects in Indian economy?
1. Increased dependence of agriculture on purchased inputs and privately managed irrigation
2. More employment of labour by larger landholding farmers
3. Lowered participation of women in agricultural workforce due to new technology
4. The failure of the Green Revolution
(a) 1 and 2
(b) 2 and 3
(c) 1 and 3
(d) 2 and 4

Answer: (c) 1 and 3

20. Which of the following are not correct assessments of the decades of India’s Five-Year Plans?
1. There has been very low capital formation
2. Growth has favoured the better off
3. Production has increased substantially though often falling short of targets
4. The public sector has contributed nothing to economic growth
(a) 1 and 4
(b) 2 and 3
(c) 1, 2 and 3
(d) 3 and 4

Answer: (a) 1 and 4

Part-2: Fundamentals of Indian Economy and Planning MCQ for Practice

21. Who is the Deputy Chairman of Planning Commission?
(a) Prime Minister
(b) Finance Minister
(c) Commerce Minister
(d) None of the above

Answer: (d) None of the above

22. The deputy chairman of the Planning Commission: [UP PCS 1994]
(a) is the Prime Minister
(b) is the Planning Minister
(c) holds the rank of a cabinet minister
(d) is an economist of repute

Answer: (c) holds the rank of a cabinet minister

23. Who was the first Deputy Chairman of Planning Commission of India? (a) Shri Jawaharlal Nehru
(b) Dr.Rajendra Prasad
(c) Shri V.T.Krishnamachari
(d) Shri C.Rajagopalachari

Answer: (c) Shri V.T.Krishnamachari

24. The Planning Commission of India:
I. was set up in 1950
II. is a constitutional body
III. is an advisory body
IV. is a government department
(a) I and II
(b) II and III
(c) I and III
(d) III only

Answer: (c) I and III

25. Put in chronological order
1. Constitution of National Planning Committee -by the Indian National Congress under Jawaharlal Nehru
2. Planned Economy for India by Visvesvaraya published
3. Bombay Plan
4. Setting up of the National Development Council
(a) 1, 2, 3, 4
(b) 3, 2, 4, 1
(c) 2, 3, 1, 4
(d) 2, 1, 3, 4

Answer: (d) 2, 1, 3, 4

26. Microeconomics is concerned with:
1. behaviour of industrial decision-makers
2. the level of employment
3. changes in the general level of prices
4. determination of prices of goods and services
(a) 1 and 2
(b) 2 and 3
(c) 3 and 4
(d) 1 and 4

Answer: (d) 1 and 4

27. Indicative Planning being pursued in India since the 8th Plan aims at ensuring that:
1. Planning mechanism plays a facilitatory role
2. Planning mechanism brings about a balance between need and supply
3. Planning mechanism concerns itself with optima! utilisation of resources
4. Planning concerns itself with laying down broad directions in which the economy should move
Choose the correct answer from:
(a) 1,2 and 4
(b) 1 and 2
(c) 1, 2, 3 and 4
(d) 2, 3 and 4

Answer: (c) 1, 2, 3 and 4

28. Consider the following statements: [IAS 2004]
1. Planning mechanism plays a facilitatory role
2. The Secretary of the Planning Commission of India is also the Secretary of National Development Council.
3. The Constitution includes economic and social planning in the Concurrent List in the Seventh Schedule of the Constitution of India.
Which of the statements given above is/are correct?
(a) 1 and 2
(b) 2 only
(c) 2 and 3
(d) 3 only

Answer: (b) 2 only

29. The basic objectives of Indian planning are:
1. economic growth
2. self-reliance
3. employment generation
4. population growth
(a) 1, 2 and 4
(b) 1, 2 and 3
(c) 2 and 3
(d) 1, 2, 3 and 4

Answer: (b) 1, 2 and 3

30. An underdeveloped economy is generally characterized by:
1. Iow per capita income
2. Iow rate of capital formation
3. Iow dependency figure
4. working force largely in the tertiary sector
(a) 1 and 2
(b) 2 and 3
(c) 3 and 4
(d) 1 and 4

Answer: (a) 1 and 2

Part-2: Fundamentals of Indian Economy and Planning MCQ for Practice

31. Self-reliance in the economic context implies that a country:
1. meets its demands for all goods and services from its domestic production
2. exports some of its goods but does not need to import anything
3. has sufficient foreign exchange reserves to buy all its needs
4. meets its demand for certain vital goods and services from its domestic production
(a) 1 and 3
(b) 2 and 4
(c) 1, 2 and 3
(d) 3 and 4

Answer: (d) 3 and 4

32. Which of the following gives an accurate measurement of economic development through Five Year Plans?
(a) Development of education and health services
(b) Development of railways and roadways
(c) Rise in national income and per capita income
(d) Development of industrial towns and industrial estates

Answer: (c) Rise in national income and per capita income

33. In India, the Public Sector is most dominant in: [IAS 1993]
(a) transport
(b) steel production
(c) commercial banking
(d) organized term-lending financial institutions

Answer: (c) commercial banking

34. The first attempt to initiate economic planning in India was made by:
(a) Balwantrai Mehta
(b) Vallabhbhai Patel
(c) M. Visvesvaraya
(d) Jawaharlal Nehru

Answer: (c) M. Visvesvaraya

35. The decentralisation system was recommended by:
(a) C.Rajagopalachari
(b) J.B. Kripalan
(c) Balwant Rai Mehta
(d) Ashok Mehta

Answer: (c) Balwant Rai Mehta

36. Match the following.: [UP PCS 1994]
A. First Plan 1. Rapid industrialisation
B. Second Plan 2. Community Development Programme
C. Third Plan 3. Expansion of basic industries
D. Fourth Plan 4. Minimum Needs Programme
E. Fifth Plan 5. Achievement of self-reliance and growth with stability

(a) 1 2 3 4 5 (b) 2 1 3 5 4

Answer: (b) 2 1 3 5 4

37. The main objective of First Five-year Plan was:

(a) industrial growth (b) economic growth

(d) self-reliance

Answer: (c) development of agriculture including irrigation and power projects

38. India had a plan holiday: [CPO AC 2003]
(a) after the China-India War of 1962
(b) after the drought of 1966
(c) after the liberation of Bangladesh in 1971
(d) after the India-Pakistan War in 1965

Answer: (b) after the drought of 1966

39. Rolling plan was designed for the period: [IAS 2003]
(a) 1978-83
(b) 1980-85
(c) 1985-90
(d) 1974-97

Answer: (a) 1978-83

40. ‘The strategy of Rolling plan was adopted during the Prime Minister ship of: [Railways 1994]
(a) Lal Bahadur Shastri
(b) Indira Gandhi
(c) Morarji Desai
(d) Rajiv Gandhi

Answer: (c) Morarji Desai

Part-2: Fundamentals of Indian Economy and Planning MCQ for Practice

41. A rolling plan was a plan for:
(a) one year
(b) three years
(c) five years
(d) year to year basis

Answer: (a) one year

42. The basic feature of the Rolling Plans was that:
(a) no physical targets were visualized
(b) revision of the achievements, of previous year
(c) annual fluctuations in prices and major economic developments could be considered
while fixing targets
(d) no financial target except in the term of annual plans was envisaged

Answer: (a) no physical targets were visualized

43. The growth rate of agricultural production was negative in the:
(a) First Plan
(b) Second Plan
(c) Third Plan
(d) Fourth Plan

Answer: (c) Third Plan

44. Which one of the following is the task of the Planning Commission? [NDA 1991]
(a) Preparation of the plan
(b) Implementation of the plan
(c) Financing of the plan
(d) Both (a) and (b)

Answer: (a) Preparation of the plan

45. Who wrote the book ‘Planned Economy for India’?
(a) M. Visvesvaraya
(b) Sardar Vallabhbhai Patel
(c) Mahatma Gandhi
(d) Jawaharlal Nehru

Answer: (a) M. Visvesvaraya

46. ‘Globalisation of Indian Economy’ means:
(a) stepping up external borrowings
(b) establishing Indian business units abroad
(c) having minimum possible restrictions on economic relations with other countries
(d) giving up programmers of import substitution

Answer: (c) having minimum possible restrictions on economic relations with other countries

47. The contribution of agriculture to India’s’ economy is:
(a) increasing
(b) decreasing
(c) constant
(d) None of these

Answer: (b) decreasing

48. Which of the following bodies finalises the Five Year Plan proposals? [IAS 2002]
(a) Planning Commission
(b) Union Cabinet
(c) National Development Council
(d) Ministry of Planning

Answer: (c) National Development Council

49. Which one of the following is NOT with in the duties of the Planning Commission?[NDA 2003]
(a) To define the stage of growth and suggest allocation of resources.
(b) To make an assessment of the material, capital and human resources of the country.
(c) To determine the nature of machinery required for implementation of plan proposals.
(d) To prepare the annual central budget.

Answer: (d) To prepare the annual central budget

50. The basic difference between imperative and indicative planning is that: [IAS 1993]
(a) it is easier to achieve targets in imperative type of planning.
(b) in the case of imperative planning, all economic activities belong to public sector, while in the other type they belong to the private sector.
(c) in the case of the imperative planning, the market mechanism is entirely replaced by a command hierarchy, while in the case of indicative planning, it is looked upon as a way to improve the functioning of the market system.
(d) in the case of indicative planning, there is no need to nationalize any industry.

Answer: (c) in the case of the imperative planning, the market mechanism is entirely replaced by a command hierarchy, while in the case of indicative planning, it is looked upon as a way to improve the functioning of the market system.

Part-2: Fundamentals of Indian Economy and Planning MCQ for Practice Part-2: Fundamentals of Indian Economy and Planning MCQ for Practice Part-2: Fundamentals of Indian Economy and Planning MCQ for Practice Part-2: Fundamentals of Indian Economy and Planning MCQ for Practice Part-2: Fundamentals of Indian Economy and Planning MCQ for Practice Part-2: Fundamentals of Indian Economy and Planning MCQ for Practice

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