50 Most Important Questions On Economics For CDS Exam

cds 2020 important questions

50 Important Questions On Economics For CDS Exam. CDS 1 2020 will be conducted on 2nd February 2020. Candidates preparing for CDS 1 2020 exam must go through these 50 most important gk questions curated specially for them. Go through these questions and boost your preparation.

1. When the productive capacity of the economic system of a State is inadequate to create sufficient number of jobs, it is called

  1. Seasonal unemployment
  2. Structural unemployment
  3. Disguised unemployment
  4. Cyclical unemployment

2. Fiscal policy in India is formulated by

  1. The Reserve Bank of India
  2. The Planning Commission
  3. The Finance Ministry
  4. The Securities and Exchange board of India

3. Which one among the following is not a clause of World Trade Organization?

  1. Most favoured nation treatment
  2. Lowering trade barriers with negotiations
  3. Providing financial support to the countries having deficit balance of payments
  4. Discouraging unfair trade practices such as anti-dumping and export subsides

4. Special Drawings Rights (SDRs) relate to

  1. The World Bank
  2. The Reserve Bank of India
  3. The World Trade Organization
  4. The International Monetary Fund

5. Which of the following measures should be taken when an economy is going through inflationary pressures?

  1. The direct taxes should increased.
  2. The interest rate should be reduced.
  3. The public spending should be increased.

Select the correct answer using the code given below:


  1. 1 only
  2. 2 only
  3. 2 and 3
  4. 1 and 2

6. National income ignores

  1. Sales of a firm
  2. Salary of employees
  3. Exports of the IT sector
  4. Sale of land

7. The TEAM-9 initiative is a techno economic cooperation venture between India and eight countries of

  1. West Africa
  2. East Africa
  3. North Africa
  4. Central Africa

8. Which one among the following is not true for Special Economic Zones?

  1. No licence is required for import
  2. Manufacturing and service activities are allowed
  3. No permission for subcontracting
  4. No routine examination of cargo for export/import by customs authorities

9. According to Goldman Sachs’ review of emerging economies, by 2050 which one of the following would be the order of the largest economies in the world?

  1. China-USA-India-Brazil-Mexico
  2. USA-China-India-Brazil-Mexico
  3. China-USA-Brazil-India-Mexico
  4. USA-Mexico-China-India-Brazil

10. Who estimated the National Income for the first time in India?

  1. Mahalanobis
  2. Dadabhai Naoroji
  3. VKRV Rao
  4. Sardar Patel

11. Economic development depends on

  1. Natural resources
  2. Capital formation
  3. Size of the market
  4. All of the above

12. National income is generated from

  1. any money making activity
  2. any laborious activity
  3. any profit-making activity
  4. any productive activity

13. Money supply is governed by the

  1. Planning Commission
  2. Finance Commission
  3. Reserve Bank of India
  4. Commercial Banks

14. The present Indian monetary system is based on

  1. Gold Reserve System
  2. Proportional Reserve System
  3. Convertible Currency System
  4. Minimum Reserve System

15. A situation where we have people whose level of income is not sufficient to meet the minimum consumption expenditure is considered as

  1. Absolute Poverty
  2. Relative Poverty
  3. Urban Poverty
  4. Rural Poverty

16. Full convertibility of a rupee means

  1. Purchase of foreign exchange for rupees freely
  2. Payment for imports in terms of rupees
  3. Repayment of loans in terms of rupees
  4. Determination of rate of exchange between rupee and foreign currencies freely by the market forces of demand and supply

17. India is called a mixed economy because of the existence of

  1. Public Sector
  2. Private Sector
  3. Joint Sector
  4. Cooperative Sector

Choose the correct answer:

  1. 1, 4
  2. 1, 2
  3. 3, 4
  4. 2, 4

18. The term stagflation refers to a situation where

  1. Growth has no relation with the change in prices
  2. Rate of growth and prices both are decreasing
  3. Rate of growth is faster than the rate of price increase
  4. Rate of growth is slower than the rate of price increase

19. Revealed Preference Theory was propounded by

  1. Adam Smith
  2. Marshall
  3. A. Samuelson
  4. S. Mill

20. Gross Domestic Product is defined as the value of all

  1. Goods produced in an economy in a year
  2. Goods and services produced in an economy in a year
  3. Final goods produced in an economy in a year
  4. Final goods and services produced in an economy in a year

21. An exceptional demand curve is one that moves

  1. Upward to the right
  2. Downward to the right
  3. Horizontally
  4. Vertically

22. Production function explains the relationship between

  1. Initial inputs and ultimate output
  2. Inputs and ultimate consumption
  3. Output and consumption
  4. Output and exports

23. The Draft of the Five Year Plans in India is approved by the

  1. National Development Council
  2. Planning Commission
  3. National Productivity Council
  4. Ministry of Finance

24. In Economics the terms ‘Utility’ and ‘Usefulness’ have

  1. Same meaning
  2. Different meaning
  3. Opposite meaning
  4. None of the above

25. Nature of unemployment in agriculture in India is

  1. Only seasonal
  2. Only disguised
  3. Both (a) and (b)
  4. None of the above

26. The terms “Micro Economics” and “Macro Economics” were coined by

  1. Alfred Marshall
  2. Ragner Nurkse
  3. Ragner Frisch
  4. J.M. Keynes

27. During periods of inflations, tax rates should

  1. Increase
  2. Decrease
  3. Remain constant
  4. Fluctuate

28. Which is the biggest tax paying sector in India?

  1. Agricultural sector
  2. Industrial sector
  3. Transport sector
  4. Banking Sector

29. Economics is what it ought to be. This statement refers to

  1. Normative Economics
  2. Positive Economics
  3. Monetary Economics
  4. Fiscal Economics

30. The excess of price a person is to pay rather than forego the consumption of the commodity is called

  1. Price
  2. Profit
  3. Producer Surplus
  4. Consumer Surplus

31. A want becomes a demand only when it is backed by the

  1. Ability to purchase
  2. Necessity to buy
  3. Desire to buy
  4. Utility of the product

32. The ‘break-even’ point is where

  1. marginal revenue equals marginal cost
  2. average revenue equals average cost
  3. total revenue equals total cost
  4. none of the above

33. Rate of interest is determined by

  1. The rate of return on the capital invested
  2. Central Government
  3. Liquidity preference
  4. Commercial Banks

34. The purchase of shares and bonds of Indian companies by Foreign Institutional Investors is called?

  1. FDI
  2. Portfolio Investment
  3. NRI Investment
  4. Foreign Indirect Investment

35. An individual’s actual standard of living can be assessed by

  1. Gross National Income
  2. Net National Income
  3. Per Capita Income
  4. Disposable Personal Income

36. When there is an official change in the exchange rate of domestic currency, then it is called

  1. Appreciation
  2. Depreciation
  3. Revaluation
  4. Deflation

37. Inflation redistributes income and wealth in favour of

  1. Pensioners
  2. Poor
  3. Middle class
  4. Rich

38. The fringe benefit tax was introduced in the budget of

  1. 2003-04
  2. 2004-05
  3. 2005-06
  4. 2006-07

39. Excise Duty is a tax levied on :

  1. Commodities that are exported
  2. Commodities that are imported
  3. Both the exported and imported commodities
  4. Commodities that are produced and consumed within the country

40. Who coined the term “Hindu rate of growth for Indian economy”?

  1. A.K. Sen
  2. Kirit S. Parikh
  3. Raj Krishna
  4. Montek Singh Ahluwalia

41. Which one of the following is NOT an example of indirect tax?

  1. Sales tax
  2. Excise duty
  3. Customs duty
  4. Expenditure tax

42. The major aim of devaluation is to –

  1. Encourage imports
  2. Encourage exports
  3. Encourage both exports and imports
  4. Discourage both exports and imports

43. Interest on public debt is a part of –

  1. Transfer payments by the enterprises
  2. Transfer payments by the govt.
  3. National income
  4. Interest payments by house-holds

44. Structural unemployment arises due to –

  1. Deflationary conditions
  2. Heavy industry bias
  3. Shortage of raw materials
  4. Inadequate productive capacity

45. Which of the following is not a necessary condition for the development of India?

  1.  Capital accumulation
  2. Resource discovery
  3. Population growth
  4. Technological development

46. Personal disposable income is –

  1. Always equal to personal income
  2. Always more than personal income
  3. Equal to personal income minus direct taxes paid by household
  4. Equal to personal income minus indirect taxes

47. Which of the following most closely approximates our definition of oligopoly?

  1. The cigarette industry
  2. The barber shops
  3. The gasoline stations
  4. Wheat farmers

48. Who said ‘Supply creates its own demand’?

  1. Adam Smith
  2. B. Say
  3. Marshall
  4. Ricardo

49. The Indian economy can be most appropriately described as a –

  1. Capitalist economy
  2. Socialist economy
  3. Traditional economy
  4. Mixed economy

50. Indirect tax means –

  1. There is no direct relationship between the tax payer and the government
  2. Direct relationship between tax payer and the government
  3. Tax base is income
  4. The incidence and impact are on the same person on whom tax is imposed

51. One of the essential conditions of perfect competition is –

  1. Product differentiation
  2. Multiplicity of prices for identical products at any one time
  3. Many sellers and a few buyers
  4. Only one price for identical goods at any one time

52. An essential attribute of Inflation is :

  1. the absence of the black-market
  2. the presence of black-market
  3. increase in prices
  4. fall in production

53. National income of a country is based on :

  1. the taxes earned by the state
  2. the sum of all factor incomes
  3. personal incomes of all the citizens
  4. surplus of exports over imports

54. Liquidity Preference Theory of Interest was propounded by

  1. Adam Smith
  2. J.M. Keynes
  3. Alfred Marshall
  4. David Ricardo


1.b  2.c  3.c  4.d  5.a  6.d  7.a  8.c  9.a  10.b

11.d  12.a  13.c  14.d  15.a  16.d  17.b  18.d  19.c  20.d

21.a  22.a  23.a  24.b  25.c  26.c  27.a  28.b  29.a  30.d

31.a  32.c  33.c  34.d  35.c  36.c  37.d  38.c  39.d  40.c

41.d  42.b  43.b  44.d  45.c  46.c  47.c  48.b  49.d  50.a

51.b  52.c  53.c  54.b




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