APPSC Group 2 · Mains Paper II · Topic 1
1 APPSC Group 2 Indian Economy questions with answers
103 questions from APPSC G2 Mains Paper II Mock 1 with answers and APPSC G2 Mains Paper II 2025 question paper with answers. Try each one, then tap Show answer.
Previous-paper questions are as in the original paper. Medha AI wrote the answers and explanations.
1.1National income & growthNotes
-
Assertion (A): A rise in the marginal propensity to consume raises the value of the investment multiplier.
Reason (R): In the simple Keynesian model, the investment multiplier equals 1 / (1 - MPC).
Select the correct answer using the code given below.
Show answerHide answer
Answer A. Both A and R are true, and R is the correct explanation of A
Both A and R are true, and R explains A. Since the multiplier is 1/(1 - MPC), a higher MPC makes the denominator smaller and the multiplier larger.
Source: NCERT Class 12 Introductory Macroeconomics ch.4 (pp.71-72)
-
'Poverty and Un-British Rule in India', which contains one of the earliest estimates of India's per capita income, was written by
Show answerHide answer
Answer C. Dadabhai Naoroji
The book is by Dadabhai Naoroji, one of the early estimators of India's national income.
Source: Modern India (ref) p.133; NCERT Class 11 IED ch.1 (p.21)
-
Consider the following:
I. Savings
II. Taxes
III. Exports
IV. Imports
Which of the above are leakages from the circular flow of income?
Show answerHide answer
Answer B. I, II and IV only
Savings, taxes and imports are leakages. Exports, like investment and government spending, are injections.
Source: PW Indian Economy (ref) ch.2 (p.17)
-
The Human Development Index was created in 1990 by
Show answerHide answer
Answer D. Mahbub-ul-Haq
Mahbub-ul-Haq created the HDI in 1990. Amartya Sen worked with him on the early Human Development Reports.
Source: NCERT Class 12 Fundamentals of Human Geography ch.4 (p.24)
-
In national income accounting, the wear and tear of capital goods during a year is also called
Show answerHide answer
Answer A. Consumption of fixed capital
Depreciation, the annual wear and tear of capital goods, is also called consumption of fixed capital. It is deducted from gross measures to get net measures.
Source: NCERT Class 12 Introductory Macroeconomics ch.2 (p.28)
-
In NCERT's simple Keynesian model, if the supply of final goods is infinitely elastic at a constant price in the short run, aggregate output is determined solely by aggregate demand. This is called the
Show answerHide answer
Answer D. Effective demand principle
This is the effective demand principle: with supply infinitely elastic at a constant price, output is determined only by the value of aggregate demand.
Source: NCERT Class 12 Introductory Macroeconomics ch.4 and Glossary (p.111)
-
Consider the following statements:
I. The capital-output ratio is the amount of capital needed to produce one unit of output.
II. A higher incremental capital-output ratio (ICOR) shows more efficient use of capital.
III. With a given saving rate, a lower capital-output ratio allows a higher growth rate.
Which of the statements given above is/are correct?
Show answerHide answer
Answer C. I and III only
I and III are correct. A higher ICOR means more capital is needed for each extra unit of output, so capital is used less efficiently.
Source: PW Indian Economy (ref) ch.2 (p.17)
-
Match List I (aggregate) with List II (how it is obtained):
List I
a. GNP at market prices
b. NNP at market prices
c. National Income
d. GVA at basic prices
List II
I. GDP at market prices minus net product taxes
II. GDP at market prices plus net factor income from abroad
III. NNP at market prices minus net indirect taxes
IV. GNP at market prices minus depreciation
Show answerHide answer
Answer B. a-II, b-IV, c-III, d-I
GNP = GDP + NFIA; NNP = GNP - depreciation; NI = NNP at MP - net indirect taxes; GVA at basic prices = GDP at MP - net product taxes. NCERT gives these identities in its summary table.
Source: NCERT Class 12 Introductory Macroeconomics ch.2 (p.35, p.37)
-
Which of the following are included in Private Income?
I. Interest on national debt
II. Net factor income from abroad
III. Current transfers from the government
Select the correct answer using the code given below.
Show answerHide answer
Answer B. I, II and III
All three are included. Private Income = factor income from NDP accruing to the private sector + national debt interest + NFIA + current transfers from government + other net transfers from the rest of the world.
Source: NCERT Class 12 Introductory Macroeconomics ch.2 (p.37)
-
The Physical Quality of Life Index (PQLI) devised by Morris David Morris combines
Show answerHide answer
Answer A. life expectancy at age one, infant mortality and basic literacy
PQLI uses life expectancy at age one, infant mortality and basic literacy. It deliberately leaves out income.
Source: M.D. Morris, Measuring the Condition of the World's Poor (1979)
-
Which of the following is not a method of measurement of National Income ?
Show answerHide answer
Answer D. Cost and Accounting method
National income is measured by the value added (product), income and expenditure methods; there is no 'cost and accounting' method.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q8, final key
-
The part of investment (Increase or Decrease) which takes place due to change in the level of national income is termed as
Show answerHide answer
Answer C. Induced investment
Induced investment varies with income (and profits); autonomous investment does not depend on the level of income.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q10, final key
-
What item(s) account for the differences between GDP at factor cost and GDP at market prices ?
Show answerHide answer
Answer C. Indirect taxes and subsidies
GDP at market prices = GDP at factor cost + indirect taxes - subsidies (net indirect taxes).
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q31, final key
-
Assertion (A): Transfer earnings are not to be included in the estimation of National Income.
Reason (R) : Transfer earnings are not payments for factor services.
Show answerHide answer
Answer A. Both (A) and (R) are correct and (R) is the correct explanation of (A)
Transfer payments such as pensions, scholarships and gifts are not earned for any productive (factor) service, so they are left out of national income.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q38, final key
1.19Latest Union Budget & Economic SurveyNotes
-
Which mission announced in the Union Budget 2025-26 covers small, medium and large industries to support 'Make in India'?
Show answerHide answer
Answer A. National Manufacturing Mission
The National Manufacturing Mission covers small, medium and large industries under 'Make in India'.
Source: PW Indian Economy (p.124); Budget Speech 2025-26 (1 Feb 2025)
-
To enable active partnership with the private sector in nuclear energy, the Union Budget 2025-26 proposed amendments to the
Show answerHide answer
Answer B. Atomic Energy Act and the Civil Liability for Nuclear Damage Act
Along with the Nuclear Energy Mission, the Budget proposed amendments to the Atomic Energy Act and the Civil Liability for Nuclear Damage Act to enable private sector participation.
Source: Union Budget 2025-26, Budget Speech (1 Feb 2025)
-
How many Atal Tinkering Labs are to be set up in government schools over five years, as announced in the Union Budget 2025-26?
Show answerHide answer
Answer D. 50,000
The Budget announced 50,000 Atal Tinkering Labs in government schools over five years.
Source: Budget Speech 2025-26 (1 Feb 2025)
-
Using PM Gati Shakti, a new National Geospatial Mission (2025-26) is expected to help modernise land records and urban planning. Its main aim is to
Show answerHide answer
Answer A. Develop foundational geospatial infrastructure and data
The National Geospatial Mission will develop foundational geospatial infrastructure and data; using PM Gati Shakti it will help modernise land records, urban planning and infrastructure design.
Source: Union Budget 2025-26, Budget Speech (1 Feb 2025)
-
The Union Budget 2025-26 proposed 50-year interest-free loans to states for capital expenditure and reforms amounting to
Show answerHide answer
Answer B. Rs 1.5 lakh crore
Rs 1.5 lakh crore was proposed for 50-year interest-free loans to states for capex and reforms.
Source: Budget Speech 2025-26 (1 Feb 2025)
-
Consider the following statements about the Union Budget 2025-26:
I. The Revised Estimate of the fiscal deficit for 2024-25 is 4.8% of GDP.
II. The Budget Estimate of the fiscal deficit for 2025-26 is higher than the Revised Estimate for 2024-25.
Which of the statements given above is/are correct?
Show answerHide answer
Answer B. I only
Only I is correct. The 2025-26 BE (4.4%) is lower than the 2024-25 RE (4.8%).
Source: Budget Speech 2025-26 (1 Feb 2025)
-
As per the Union Budget 2025-26, the Central Government's debt-to-GDP ratio in 2025-26 (Budget Estimates) is estimated at
Show answerHide answer
Answer B. 56.1%
The Budget estimated the Central Government debt-to-GDP ratio at 56.1% in 2025-26 (BE), down from 57.1% in 2024-25 (RE).
Source: Union Budget 2025-26, Fiscal Policy Strategy Statement; PW Indian Economy (p.52 printed)
-
The Union Budget 2025-26 announced a new urea plant with an annual capacity of 12.7 lakh metric tonnes at
Show answerHide answer
Answer C. Namrup
A 12.7 lakh MT urea plant is to be set up at Namrup, Assam.
Source: Budget Speech 2025-26 (1 Feb 2025)
-
Which of the following pairs of income slab and tax rate under the new tax regime (Budget 2025-26) is NOT correctly matched?
Show answerHide answer
Answer A. Rs 8 lakh - Rs 12 lakh : 15%
The Rs 8-12 lakh slab is taxed at 10%; the other pairs are correct.
Source: Budget Speech 2025-26 (1 Feb 2025)
-
Consider the following statements about the Nuclear Energy Mission announced in the Union Budget 2025-26:
I. It has an outlay of Rs 20,000 crore for research and development of Small Modular Reactors.
II. At least five indigenously developed Small Modular Reactors are to be operational by 2033.
III. The Budget mentioned a target of at least 100 GW of nuclear power by 2047.
Which of the statements given above is/are correct?
Show answerHide answer
Answer C. I, II and III
All three are correct: Rs 20,000 crore for SMR R&D, five SMRs by 2033 and at least 100 GW of nuclear power by 2047.
Source: Budget Speech 2025-26 (1 Feb 2025)
-
Which of the following statements are correct regarding PURVODAYA scheme introduced by the Government of India in 2024 ?
I. The PURVODAYA scheme aims to improve infrastructure in the eastern part of India.
II. It deals with Buxar-Bhagalpur Expressway.
III. New Delhi-Kolkata Industrial Corridor is being developed as part of the PURVODAYA scheme.
IV. The primary goal of this scheme is the development of Gujarat State.
Show answerHide answer
Answer A. I, II only
Purvodaya (Union Budget 2024-25) targets Bihar, Jharkhand, West Bengal, Odisha and Andhra Pradesh and includes road projects such as the Buxar-Bhagalpur expressway. The corridor linked to it is the Amritsar-Kolkata Industrial Corridor, and Gujarat is not its focus.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q3, final key
-
Statement A : The GoI fiscal deficit R E for 2024-25 is 4.8% of GDP.
Statement B : It is higher than the Fiscal Deficit B E for 2025 - 2026.
Show answerHide answer
Answer C. Both Statements are correct
Union Budget 2025-26 put the 2024-25 revised fiscal deficit at 4.8% of GDP and budgeted 4.4% for 2025-26, so 4.8% is higher.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q12, final key
-
As per the Economic Survey, 2023, which of the following statements correctly describe(s) the trend of Foreign Direct Investment in India ?
a. It has decreased due to less participation of the private sector.
b. It has increased compared to the prepandemic levels.
c. It has increased rapidly without decreasing in any Financial Year after the telecom sector was entirely reformed.
d. It has decreased due to a weak global economic situation.
Show answerHide answer
Answer D. d only
The Economic Survey 2022-23 noted that FDI inflows into India fell in 2022, in line with the global decline caused by weak and uncertain world economic conditions.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q27, final key
-
Assertion (A) : India's real Gross Domestic Product (GDP) grew by 8.2% in FY24 despite global and external challenges.
Reason (R) : The focus on maintaining macroeconomic stability ensured that these challenges had minimal impact on India's economy.
Show answerHide answer
Answer A. Both (A) and (R) are true and (R) is the correct explanation of (A)
The Economic Survey 2023-24 reported 8.2% real GDP growth in FY24 and credited the government's focus on macroeconomic stability for limiting the effect of external shocks.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q46, final key
-
Assertion (A) : The Indian economy demonstrated resilience despite global geopolitical challenges.
Reason (R) : India's fiscal and monetary policies ensured economic and financial stability post-COVID.
Show answerHide answer
Answer A. Both (A) and (R) are true and (R) is the correct explanation of (A)
Recent Economic Surveys describe India's economy as resilient to geopolitical shocks and attribute this to prudent fiscal and monetary policy that kept post-COVID stability.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q48, final key
1.11External sector, BoP & tradeNotes
-
Consider the following statements about India's balance of payments:
I. India usually has a deficit in merchandise trade.
II. India usually has a surplus in trade in services.
III. Private remittances sent home by Indians working abroad are recorded in the capital account.
Which of the statements given above is/are correct?
Show answerHide answer
Answer C. I and II only
Statements I and II are correct. Remittances are current transfers and are recorded in the current account, not the capital account.
Source: Indian Economy (reference) ch.6 pp.67-70
-
Which of the following transactions is recorded in the current account of India's balance of payments?
Show answerHide answer
Answer C. Money sent home by Indians working in the Gulf
Remittances by Indians working abroad are transfer payments and are recorded in the current account. FDI, external commercial borrowings and NRI deposits are capital account items.
Source: NCERT Class 12 Introductory Macroeconomics ch.6 (Open Economy)
-
Which of the following agreements deals with intellectual property under the WTO?
Show answerHide answer
Answer A. TRIPS
TRIPS (Trade-Related Aspects of Intellectual Property Rights) deals with intellectual property.
Source: PW Indian Economy, BoP & Foreign Exchange chapter
-
The trade strategy followed by India during the first seven Five Year Plans, which aimed at replacing imports with domestic production, is known as:
Show answerHide answer
Answer C. Import substitution
India followed import substitution, an inward-looking strategy that protected domestic industry through tariffs and quotas.
Source: NCERT Class 11 Indian Economic Development ch.3
-
Which body investigates anti-dumping, countervailing and safeguard cases in India?
Show answerHide answer
Answer B. Directorate General of Trade Remedies
The Directorate General of Trade Remedies (DGTR) under the Ministry of Commerce investigates trade remedy cases.
Source: PW Indian Economy, BoP & Foreign Exchange chapter
-
Consider the following statements about instruments of foreign capital:
I. Foreign Currency Convertible Bonds are rupee-denominated bonds issued abroad.
II. External commercial borrowings are loans raised by Indian entities from non-resident lenders.
III. ECBs are regulated by the Reserve Bank of India.
Which of the statements given above is/are INCORRECT?
Show answerHide answer
Answer D. I only
Statement I is incorrect: FCCBs are issued in a foreign currency and can be converted into equity; rupee-denominated bonds issued abroad are masala bonds. Statements II and III are correct.
Source: PW Indian Economy, BoP & Foreign Exchange chapter
-
Consider the following statements about the WTO Agreement on Agriculture:
I. Green box support is non-trade-distorting or minimally trade-distorting and is exempt from reduction commitments.
II. Blue box support relates to production-limiting programmes.
III. Amber box support is exempt from reduction commitments.
Which of the statements given above is/are INCORRECT?
Show answerHide answer
Answer B. III only
Statement III is incorrect: amber box support is trade-distorting and is subject to reduction commitments. Statements I and II are correct.
Source: PW Indian Economy, BoP & Foreign Exchange chapter
-
Match List I (institution) with List II (headquarters):
List I
a. New Development Bank
b. Asian Infrastructure Investment Bank
c. Asian Development Bank
d. Bank for International Settlements
List II
I. Manila
II. Basel
III. Shanghai
IV. Beijing
Show answerHide answer
Answer D. a-III, b-IV, c-I, d-II
The New Development Bank is headquartered in Shanghai, the AIIB in Beijing, the ADB in Manila and the BIS in Basel.
Source: Indian Economy (reference) ch.6 pp.85-87
-
Consider the following statements about the overall balance of payments:
I. When there is an overall deficit, the central bank may sell foreign exchange from its reserves.
II. A decrease in official reserves is called the overall balance of payments deficit.
III. Official reserve transactions are more relevant under floating exchange rates than under fixed exchange rates.
Which of the statements given above is/are correct?
Show answerHide answer
Answer C. I and II only
Statements I and II are correct. Official reserve transactions matter more under fixed exchange rates, where the central bank must defend the rate.
Source: NCERT Class 12 Introductory Macroeconomics ch.6 (Open Economy)
-
Consider the following statements about NEER and REER:
I. NEER is a weighted average of the bilateral nominal exchange rates of the home currency.
II. REER is NEER adjusted for relative price levels (inflation) between the home country and its trading partners.
III. The RBI publishes NEER and REER indices only for a 6-currency basket.
Which of the statements given above is/are correct?
Show answerHide answer
Answer B. I and II only
Statements I and II are correct. The RBI publishes both 6-currency and 40-currency NEER and REER indices.
Source: PW Indian Economy, BoP & Foreign Exchange chapter; RBI Handbook of Statistics
-
India's quota share in the IMF is about:
Show answerHide answer
Answer B. 2.75 per cent
India's IMF quota share is about 2.75% (8th largest); its voting share is a little lower, about 2.63%.
Source: PW Indian Economy, BoP & Foreign Exchange chapter; IMF quota data
-
What was the primary reason for the current account surplus in Q4:2023-24 ?
Show answerHide answer
Answer B. Surge in services exports
India posted a current account surplus of about 0.6% of GDP in January-March 2024, driven mainly by strong net services exports along with a narrower merchandise trade deficit.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q5, final key
-
Which of the following statements is/are correct about Foreign Portfolio Investments (FPI) in 2024-25 ?
I. The Indian Rupee (INR) moved in a narrow range with low volatility despite FPI outflows.
II. RBI set investment limits for FPIs in debt instruments and Credit Default Swaps.
III. FPI investment limits in government securities and corporate bonds remained unchanged.
IV. RBI issued an operation framework for reclassification of FPI investments beyond permitted limits.
Show answerHide answer
Answer C. All the above
RBI's 2024-25 reports note the rupee stayed in a narrow, low-volatility range despite FPI outflows; RBI kept FPI limits in G-secs and corporate bonds unchanged, set limits for debt and credit default swaps, and issued a framework to reclassify FPI holdings above 10% as FDI.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q7, final key
-
Which of the following statements is False ?
Show answerHide answer
Answer B. A direct quote is the number of units of a foreign currency exchangeable for one unit of home currency
A direct quote gives the units of home currency per unit of foreign currency (e.g. Rs 84 = 1 USD). Units of foreign currency per unit of home currency is an indirect quote.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q11, final key
-
Which of the following mechanisms is NOT primarily followed by the Reserve Bank of India (RBI) to manage exchange rate volatility ?
Show answerHide answer
Answer A. Fiscal Policy Adjustments
Fiscal policy (taxes and spending) belongs to the government, not RBI. RBI manages rupee volatility with its forex reserves and market intervention within the market-determined system that began with LERMS.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q17, final key
-
What is the significance of the new payment settlement framework introduced by the RBI in the context of the Foreign Trade Policy 2023 ?
Show answerHide answer
Answer B. It aims to encourage the use of the Indian currency in cross-border trade
RBI's framework for invoicing and settling trade in rupees (Special Rupee Vostro Accounts), backed by FTP 2023, aims to internationalise the rupee in cross-border trade.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q18, final key
-
When currency is bought at a lower price at one place in the foreign exchange market and at the same time sold at a higher price at another place, this process is called
Show answerHide answer
Answer A. Arbitrage
Buying in one market and simultaneously selling in another to profit from a price difference is arbitrage.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q23, final key
-
Special Drawing Rights is the currency of International Monetary Fund. This is in the form of
Show answerHide answer
Answer D. Book keeping entry only
SDRs (created 1969) are an international reserve asset that exists only as entries in IMF accounts; they are not printed and not backed by metal. Hence they are called 'paper gold'.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q24, final key
-
Which of the following are included in the Reserve Bank of India's Foreign Exchange Reserves (FER) ?
a. Foreign Currency Assets (FCA)
b. Gold
c. Special Drawing Rights (SDR)
d. Reserve Tranche Position
Show answerHide answer
Answer D. All the above
India's forex reserves have four components: foreign currency assets, gold, SDRs and the reserve tranche position in the IMF.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q25, final key
-
Which of the following is not true about globalization and its impact on India ?
Show answerHide answer
Answer C. Increase in exports is greater than increase in imports
After 1991 India's imports grew faster than exports, so the trade deficit widened; trade, FDI and access to technology all expanded.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q28, final key
-
Assertion (A): Devaluation will lead to improvement in balance of trade.
Reason (R) : Devaluation will lead to increase in price of exports.
Show answerHide answer
Answer C. (A) is true and (R) is false
Devaluation makes exports cheaper for foreign buyers and imports dearer at home, which tends to improve the trade balance. So A is true but R is false.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q32, final key
-
Which of the following measures is NOT typically used to correct a disequilibrium in the Balance of Payments (BOP) ?
Show answerHide answer
Answer C. Reducing government spending on domestic projects
The key treats devaluation, tariffs and attracting FDI as the usual BOP correction tools, and cutting spending on domestic projects as not one of them. In textbooks, cutting spending to reduce demand (expenditure-reducing policy) is also a recognised remedy, so the question is open to argument.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q36, final key
-
Which among the following statements is correct ?
Show answerHide answer
Answer A. Balance of payments includes current account and capital account
The balance of payments records all transactions with the rest of the world in two main parts: the current account (trade, services, income, transfers) and the capital account.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q37, final key
-
The situation where a country simultaneously imports and exports the same product is called
Show answerHide answer
Answer D. Intra-industry trade
Two-way trade in the same product or industry (for example, a country both importing and exporting cars) is intra-industry trade.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q40, final key
1.6Money, banking & monetary policyNotes
-
The National Bank for Financing Infrastructure and Development (NaBFID), set up under an Act of Parliament in 2021, is a development finance institution mainly for
Show answerHide answer
Answer C. infrastructure
NaBFID was set up under the NaBFID Act, 2021 as a development finance institution for long-term infrastructure financing.
Source: Indian Economy (reference) ch.3 p.31; NaBFID Act 2021
-
On 19 July 1969 the Government of India nationalised
Show answerHide answer
Answer C. 14 commercial banks
Fourteen major commercial banks were nationalised in July 1969; six more followed in April 1980.
Source: NCERT Class 11 Indian Economic Development ch.5 (p.94); Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970
-
Seigniorage refers to
Show answerHide answer
Answer D. the difference between the face value of money and the cost of producing it
Seigniorage is the difference between the value of money and the cost of producing it; it is the profit of the issuing authority from issuing currency.
Source: Indian Economy (reference) ch.3 p.24
-
On 15 April 1980, in the second round of bank nationalisation, the number of banks taken over by the Government of India was
Show answerHide answer
Answer C. six banks
Six private banks were nationalised on 15 April 1980. The first round, on 19 July 1969, covered 14 banks.
Source: Banking Companies (Acquisition and Transfer of Undertakings) Act 1980
-
Consider the following statements:
Statement I: White label ATMs are set up, owned and operated by non-bank entities.
Statement II: White label ATMs carry the logo of the bank whose cash they dispense.
Which of the statements given above is/are correct?
Show answerHide answer
Answer A. I only
Only statement I is correct. White label ATMs are owned and operated by non-bank entities authorised by the RBI and do not carry any bank's logo; that is why they are called 'white label'.
Source: Indian Economy (reference) ch.3 p.26; RBI White Label ATM guidelines (2012)
-
Consider the following statements about the Liquidity Adjustment Facility (LAF) corridor:
I. The SDF rate is the floor of the LAF corridor.
II. The MSF rate is the ceiling of the LAF corridor.
III. After April 2022 the fixed-rate reverse repo continued to be the floor of the corridor.
Which of the statements given above is/are correct?
Show answerHide answer
Answer B. I and II only
I and II are correct. From April 2022 the SDF rate replaced the fixed-rate reverse repo as the floor.
Source: PW Indian Economy, ch.4 Monetary Policy and Inflation (LAF corridor)
-
How does the introduction of the Standing Deposit Facility (SDF) enhance the Reserve Bank of India's (RBI) liquidity management framework ?
Show answerHide answer
Answer B. By absorbing surplus liquidity without the need for collateral
SDF (April 2022) lets RBI absorb surplus liquidity from banks without giving government securities as collateral, unlike reverse repo; it is the floor of the LAF corridor.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q15, final key
-
What is/are the goal(s) of SEBI's new move to introduce T+0 settlement ?
I. To enhance liquidity and reduce settlement risk in the stock market.
II. To minimize counter party risk and enhance market efficiency.
III. Potentially reduce the impact of market volatility on settlement.
IV. To increase operational expenses for market participants.
Show answerHide answer
Answer C. I, II, III only
Same-day (T+0) settlement, started as an optional beta in March 2024, frees funds and securities faster, cuts settlement and counterparty risk and limits exposure to price swings. Raising costs is not a goal.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q16, final key
-
Match List – I with List – II and choose correct answer. (Common codes for English and Telugu Versions)
List – I List – II a. Monetary Policy i. Tax Rate b. Trade Policy ii. Margin c. Credit Policy iii. Imports and Exports d. Fiscal Policy iv. Bank Rate Show answerHide answer
Answer A. a-iv, b-iii, c-ii, d-i
Bank rate is a monetary policy tool, trade policy governs imports and exports, credit policy works through loan margins, and fiscal policy through tax rates.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q39, final key
-
Which of the following are used for measuring of the high-power money supply (H) by RBI in India ?
Show answerHide answer
Answer C. Currency held by the public + Cash reserves of the commercial banks + Other deposits with the RBI
Reserve money (M0, high-powered money) = currency with the public + cash reserves of banks (cash in hand and deposits with RBI) + other deposits with RBI.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q43, final key
-
What was the purpose of the 49 fine-tuning operations conducted by the RBI during FY 2024 ?
Show answerHide answer
Answer C. To maintain liquidity conditions in alignment with the monetary policy stance
RBI's fine-tuning variable rate repo and reverse repo operations in 2023-24 injected or absorbed liquidity as needed, keeping conditions in line with its monetary policy stance.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q49, final key
-
Statement A : The RBI announced a temporary I-CRR of 10 per cent on 10 August 2023.
Statement B : This action impounded about Rs. 1.1 lakh crores from the banking system.
Show answerHide answer
Answer C. Both statements A and B are correct
On 10 August 2023 RBI imposed a temporary 10% incremental CRR on deposit growth between 19 May and 28 July 2023 (partly to absorb the Rs 2000 note return), which took about Rs 1.1 lakh crore out of the system; it was withdrawn in stages by October.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q50, final key
1.13Industry & infrastructureNotes
-
The Tata Iron and Steel Company (TISCO), one of the earliest modern steel companies in India, was incorporated in
Show answerHide answer
Answer B. 1907
TISCO was incorporated in 1907. A few other industries such as sugar, cement and paper came up only after the Second World War.
Source: NCERT Class 11 Indian Economic Development ch.1 (p.23)
-
Consider the following statements about the Industrial Policy Resolution of 1948:
I. Arms and ammunition, atomic energy and railway transport were made a monopoly of the Central Government.
II. In basic industries such as coal, iron and steel and shipbuilding, new undertakings were to be set up by the State, while existing private units could continue.
III. It grouped industries into three schedules, A, B and C.
IV. It was announced in April 1948.
Which of the statements given above are correct?
Show answerHide answer
Answer C. I, II and IV only
The 1948 Resolution (6 April 1948) made arms, atomic energy and railway transport a Central monopoly and reserved new units in basic industries for the State. The Schedule A, B, C grouping came only with the 1956 Resolution.
Source: PW Indian Economy, Industrial Policies of India (p.124 printed); IPR 1948 and IPR 1956
-
Which of the following are the major provisions of the Industrial Policy Resolution 1956 ?
I. Provision of licencing.
II. Expansion of public sector.
III. Emphasis on small industries.
Show answerHide answer
Answer D. I, II, III
IPR 1956 divided industries into three schedules with a dominant public sector, worked with industrial licensing under the 1951 IDR Act, and stressed small and cottage industries.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q9, final key
-
India's rank in World Bank's Logistic Performance Index in 2023
Show answerHide answer
Answer C. 38
In the World Bank LPI 2023 India ranked 38th of 139 countries, up from 44th in 2018.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q20, final key
-
A person who has ultimate control over the affairs of a factory under Factories Act, 1948 is called
Show answerHide answer
Answer A. Occupier
Section 2(n) of the Factories Act, 1948 defines the occupier as the person who has ultimate control over the affairs of the factory.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q33, final key
-
Under the Industrial Policy of 1991
Show answerHide answer
Answer D. The mandatory convertible clause is no longer applicable
The 1991 policy dropped the mandatory convertibility clause, under which financial institutions could convert their term loans to industry into equity.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q42, final key
1.4Planning, NITI Aayog & reformsNotes
-
NITI Aayog replaced the Planning Commission on
Show answerHide answer
Answer B. 1 January 2015
NITI Aayog was formed on 1 January 2015.
Source: NCERT Class 12 India People and Economy ch.6 (p.76)
-
Consider the following statements:
I. NITI Aayog's first Action Agenda, released in 2017, covered the three years 2017-18 to 2019-20.
II. NITI Aayog allocates plan funds to the States.
III. The Twelfth Plan (2012-17) was the last Five Year Plan in India.
Which of the statements given above is/are correct?
Show answerHide answer
Answer D. I and III only
NITI Aayog's India Three Year Action Agenda covered 2017-18 to 2019-20, and the Twelfth Plan (2012-17) was the last five-year plan. NITI Aayog is advisory and does not allocate funds.
Source: NITI Aayog, India Three Year Action Agenda 2017-18 to 2019-20; Polity ref p.145; Indian Economy ref p.106
-
The severe balance of payments crisis, faced by India in 1991 was characterized by
Show answerHide answer
Answer A. High inflation, low foreign exchange reserves and a large fiscal deficit
In 1991 India had double-digit inflation, reserves that covered only a few weeks of imports and a fiscal deficit near 8% of GDP, which together triggered the crisis and the reforms.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q2, final key
-
Post-economic reforms, the Indian economy saw a shift towards
Show answerHide answer
Answer C. Enhanced global integration
The 1991 LPG reforms opened trade and foreign investment, integrating India more closely with the world economy.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q6, final key
1.12Agriculture & rural economyNotes
-
Which source accounts for the largest share of the irrigated area in India?
Show answerHide answer
Answer B. Tube wells
Tube wells and bore wells irrigate the largest share of India's irrigated area, roughly 46 per cent, followed by canals.
Source: Indian Economy (reference) ch.8 p.111; NCERT Class 12 India People and Economy
-
An irrigation project with a culturable command area of 8,000 hectares is classified as a
Show answerHide answer
Answer A. medium irrigation project
Minor projects have CCA up to 2,000 ha, medium 2,000-10,000 ha and major above 10,000 ha.
Source: PW Indian Economy, ch.8 Agriculture and Allied Sector, p.111
-
Consider the following statements about the Pradhan Mantri Fasal Bima Yojana:
I. It was launched in 2016 and replaced NAIS and Modified NAIS.
II. The farmer premium for annual commercial and horticultural crops is 1.5 per cent.
III. Since Kharif 2020, enrolment has been voluntary for all farmers including loanee farmers.
Which of the statements given above is/are correct?
Show answerHide answer
Answer D. I and III only
Statements I and III are correct. I is true; II is false (it is 5 per cent); III is true.
Source: PW Indian Economy, ch.8 Agriculture and Allied Sector, p.117
-
Which of the following statements accurately describe the environmental impacts associated with agricultural practices ?
I. The application of synthetic fertilizers and pesticides may result in soil and water contamination.
II. Sustainable agriculture focuses on preserving soil health and protecting biodiversity.
III. Modern agricultural practices are unrelated to the depletion of freshwater resources.
IV. Expanding monoculture farming supports overall ecosystem stability.
Show answerHide answer
Answer D. I and II
Agro-chemicals contaminate soil and water, and sustainable farming aims to protect soil and biodiversity. Modern irrigation-heavy farming depletes groundwater, and monocultures reduce ecosystem stability.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q4, final key
-
Which organization launched the Credit Guarantee Scheme for the Livestock Sector ?
Show answerHide answer
Answer D. Department of Animal Husbandry and Dairying
The Department of Animal Husbandry and Dairying launched the Credit Guarantee Scheme for the livestock sector (under the Animal Husbandry Infrastructure Development Fund) in February 2024 to back collateral-free loans to MSMEs.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q22, final key
-
Statement A : India is the largest producer of milk.
Statement B : India is the second largest producer of fruits, vegetables and sugar.
Show answerHide answer
Answer C. Both statements A and B are correct
India is the world's largest milk producer and second to China in fruits and vegetables; in sugar it has traded first place with Brazil in recent seasons (largest in 2021-22, second in 2023-24), so on the current figures both statements are taken as correct.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q51, final key
1.15Poverty, unemployment & human developmentNotes
-
Consider the following:
Assertion (A): In India, most poor people cannot remain completely unemployed for a long time.
Reason (R): Their desperate economic condition forces them to accept whatever work is available, even unpleasant or unsafe work.
Choose the correct answer.
Show answerHide answer
Answer A. Both A and R are true, and R is the correct explanation of A
NCERT notes that people in India cannot remain completely unemployed for very long because their economic condition forces them to accept jobs nobody else would do.
Source: NCERT Class 11 Indian Economic Development ch.6 (p.108 printed)
-
Which principal methodology is employed by the National Statistical Office (NSO) as the standard mechanism for assessing and quantifying the unemployment rate within the Indian economy ?
Show answerHide answer
Answer D. Periodic Labour Force Survey (PLFS)
Since 2017-18 the NSO's Periodic Labour Force Survey is the official source for labour force participation and unemployment rates.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q13, final key
-
Which among the following classifications of unemployment is predominantly correlated with the agricultural sector ?
Show answerHide answer
Answer B. Seasonal unemployment
Farm work depends on sowing and harvest seasons, so agricultural workers are idle for part of the year: seasonal unemployment (disguised unemployment is also typical).
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q14, final key
-
Which of the following statements is/are correct ?
a. India's overall SDG score has improved to 71 in 2023-24. Uttarakhand shares the top spot with Kerala, both scored above India's overall SDG score.
b. In the latest SDG India Index 2023-24, Andhra Pradesh is placed in the "Front Runner" category.
c. Arunachal Pradesh and Meghalaya, each with scores above 75, are placed in the "Achiever" category.
d. In the 2023-2024 SDG Index, Lakshadweep and Uttar Pradesh scored significantly above the national average, demonstrating notable progress compared to other states.
Show answerHide answer
Answer A. a, b only correct
In NITI Aayog's SDG India Index 2023-24 India scored 71, Kerala and Uttarakhand topped with 79, and Andhra Pradesh (74) was a Front Runner. No state reached the Achiever band (score 100); Arunachal Pradesh and Meghalaya were among the lower scorers.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q30, final key
-
Which Indian organization is responsible for estimating the National Multidimensional Poverty Index (MPI) ?
Show answerHide answer
Answer B. NITI Aayog
NITI Aayog publishes India's National MPI (first in 2021, then 2023), using NFHS data and the global MPI method of OPHI and UNDP.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q47, final key
-
Which initiative was launched to provide a tap water connection to every rural household by 2024 ?
Show answerHide answer
Answer A. Jal Jeevan Mission (JJM)
Jal Jeevan Mission (2019) aims to give a functional household tap connection to every rural home by 2024.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q53, final key
1.10Public finance, budget & GSTNotes
-
Consider the following statements about the taxation of virtual digital assets (VDAs), such as crypto-currencies, introduced by the Finance Act, 2022:
I. Gains from their transfer are taxed at a flat rate of 30 per cent.
II. Tax at the rate of 1 per cent is deducted at source on their transfer.
III. Losses from their transfer can be set off against salary income.
Which of the statements given above is/are correct?
Show answerHide answer
Answer A. I and II only
Statements I and II are correct. Under the Finance Act, 2022, VDA gains are taxed at 30 per cent with 1 per cent TDS, and losses cannot be set off against any other income.
Source: Finance Act 2022 (Income-tax Act 1961 s.115BBH, s.194S)
-
Which of the following are part of the non-tax revenue of the Central Government?
I. Interest received on loans given to States
II. Dividends and profits from public sector enterprises
III. Cash grants-in-aid from foreign countries and international organisations
IV. Proceeds from disinvestment of shares in PSUs
Select the correct answer using the codes given below.
Show answerHide answer
Answer B. I, II and III only
Interest receipts, dividends and profits, and external cash grants-in-aid are non-tax revenue. Disinvestment proceeds reduce the government's assets, so they are a capital receipt.
Source: NCERT Class 12 Introductory Macroeconomics ch.5 (p.78, p.82)
-
Article 279A required the President to constitute the GST Council within what period from the commencement of the Constitution (101st Amendment) Act, 2016?
Show answerHide answer
Answer D. Sixty days
Article 279A(1) required the GST Council to be constituted within sixty days of the commencement of the 101st Amendment Act.
Source: Constitution Art. 279A(1)
-
In Union of India v. Mohit Minerals (2022), the Supreme Court held that the recommendations of the GST Council
Show answerHide answer
Answer A. have only persuasive value and are not binding on Parliament and State Legislatures
The Court held that GST Council recommendations are persuasive and not binding, as Parliament and State Legislatures have simultaneous power to legislate on GST.
Source: Union of India v. Mohit Minerals Pvt. Ltd. (SC, 2022)
-
Which of the following statement(s) is/are incorrect regarding the GST Council (GSTC) ?
I. The GST Council is a constitutional body established under Article 269A of the Indian Constitution.
II. The GST Council is responsible for making recommendations on issues related to the Goods and Services Tax.
III. Every state does not have an equal vote in the GST Council.
IV. Decisions of the GST Council require a three-fourths majority of the weighted votes of the members present and voting.
Show answerHide answer
Answer C. I and III
The GST Council is set up under Article 279A, not 269A, so I is incorrect. Each state has an equal vote (states together hold two-thirds of the weight), so III is also incorrect; II and IV are correct.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q1, final key
-
Which Article of the Indian Constitution empowers the Central Government to extend loans to State Governments ?
Show answerHide answer
Answer B. Article 293
Article 293 covers borrowing by states; clause (2) lets the Government of India make loans to any state. Article 292 is borrowing by the Union.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q19, final key
-
Which of the following statements about non-plan expenditures of the Central Government is correct ?
Show answerHide answer
Answer A. The expenditure is on interest payments
Before the plan/non-plan split ended in 2017-18, non-plan expenditure covered interest payments, defence, subsidies, pensions and salaries; sector development like S&T and agriculture was plan expenditure.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q29, final key
-
A budgeting process which demands each manager to justify his entire budget in detail from beginning is
Show answerHide answer
Answer C. Zero-base budgeting
Zero-base budgeting starts every budget from zero, so each item must be justified afresh rather than carried forward from last year.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q34, final key
-
Which of the following reforms have contributed to the improvement of the Ease of Doing Business in India ?
Show answerHide answer
Answer A. The introduction of GST (Goods and Services Tax)
GST (2017) replaced many central and state indirect taxes with one tax and an online system, which made trading across states and compliance easier.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q44, final key
-
There is no GST on which of the following ?
i. Petrol and Diesel
ii. Liquor
iii. Electricity supply to consumers
iv. Services of Charitable entities
Show answerHide answer
Answer D. All of the above
Petrol and diesel and alcoholic liquor for human consumption are outside GST, electricity supply is exempt, and services of registered charitable entities for charitable activities are exempt.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q45, final key
1.8Inflation & price indicesNotes
-
Consider the following statements:
I. When inflation is higher than the nominal interest rate, the real interest rate is negative.
II. Inflation reduces the real burden of debt.
III. Deflation reduces the real burden of debt.
Which of the statements given above is/are correct?
Show answerHide answer
Answer B. I and II only
I and II are correct. Deflation raises the real burden of debt because money gains value.
Source: PW Indian Economy, ch.4 Monetary Policy and Inflation (Inflation premium; Impacts; Deflation)
-
The equation of exchange MV = PT, which links the quantity of money with the price level, is associated with
Show answerHide answer
Answer D. Irving Fisher
MV = PT is Irving Fisher's equation of exchange in the quantity theory of money.
Source: Quantity theory of money; PW Indian Economy ch.3 (Velocity of money)
-
Consider the following:
Assertion (A): The Phillips curve suggests a trade-off between unemployment and inflation.
Reason (R): Stagflation is a situation of high inflation together with high unemployment.
Choose the correct answer.
Show answerHide answer
Answer B. Both A and R are true, but R is NOT the correct explanation of A
Both are true, but R does not explain A. Stagflation in fact shows the trade-off breaking down; it does not explain why the curve suggests a trade-off.
Source: PW Indian Economy, ch.4 Monetary Policy and Inflation (Phillips curve; Stagflation)
-
What impact does an increase in the GNP deflator have on the purchasing power of money ?
Show answerHide answer
Answer B. Decreases purchasing power
A rising GNP deflator means the general price level has gone up, so each unit of money buys less.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q21, final key
-
GDP deflator is the most comprehensive measure of inflation as it is the ratio of
Show answerHide answer
Answer D. GDP at Current prices to Constant prices
GDP deflator = nominal GDP (current prices) / real GDP (constant prices) x 100, covering all goods and services in GDP.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q35, final key
-
At what subsidized price per Kg did the Government introduce "Bharat Rice" for selling through NAFED, NCCF and Kendriya Bhandar ?
Show answerHide answer
Answer B. Rs. 29
Bharat Rice was launched in February 2024 at a subsidised retail price of Rs. 29 per kg through NAFED, NCCF and Kendriya Bhandar outlets.
Source: APPSC Group 2 Mains Paper II 2025 (Notification 11/2023), Q52, final key
Practise more Indian Economy. The app has more questions on this topic, picks new ones first and brings back the ones you got wrong.
All APPSC Group 2 topics · APPSC Group 2 syllabus · Start free
Medha AI is an independent preparation service. It is not affiliated with, endorsed by or connected to APPSC, TSPSC, MPSC, UPSC or any other commission or government body.