Indian Economy PYQ – National Income and Fiscal Policy

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Indian Economy PYQ – National Income and Fiscal Policy – 15 questions, subject: Economy. Every question has the correct answer with a one-line explanation; tap "Show Answer". Free practice for TNPSC, UPSC, SSC, Bank and RRB exams – Shanmugam IAS Academy, Coimbatore.

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1.  
GSCE 2021
Estimation of National Income in India is carried out by

Correct Answer: C [Central Statistical Organisation]

Explanation:

The Central Statistical Organisation estimated India's national income; in 2019 it was merged with NSSO into the National Statistical Office.

2.  
AGGS 2021
National Statistical Commission (NSC) was set up in

Correct Answer: C [2005]

Explanation:

The National Statistical Commission was set up in 2005, on the recommendation of the C. Rangarajan Commission, and began functioning in July 2006.

3.  
CTS (ITI Posts) 2025
Which of the following is an incorrect acronym?
(1) CSO – Current Statistical Office
(2) CWS – Current Weekly Status
(3) CDS – Current Daily Status
(4) NSSO – National Sample Survey Organisation

Correct Answer: A [(1) only]

Explanation:

CSO stands for Central Statistical Office (Organisation), not Current Statistical Office, so (1) is the incorrect acronym; CWS and CDS are valid employment status terms.

4.  
EO (HR&CE) 2022
Which of the following is capital-output ratio?

Correct Answer: B [Amount of capital needed to produce one unit of output]

Explanation:

The capital-output ratio is the amount of capital needed to produce one unit of output.

5.  
CAGS 2022
What is the expansion of NSDP?

Correct Answer: D [Net State Domestic Product]

Explanation:

NSDP stands for Net State Domestic Product, which equals gross state domestic product minus depreciation.

6.  
SI (Fisheries) 2023
Per capita Income can be calculated by

Correct Answer: A [National Income / Population]

Explanation:

Per capita income is national income divided by total population, showing the average income per person.

7.  
Group 1 2021
Consider the following statements. The objectives of fiscal policy are
1. Capital formation
2. Equitable distribution
3. Unemployment
4. Regional Balance
From these, which are correct statements?

Correct Answer: B [1, 2 and 4]

Explanation:

Fiscal policy aims at capital formation, equitable distribution of income and regional balance, and at raising employment rather than treating unemployment itself as an objective.

8.  
Combined Accounts Service 2024
Fiscal policy in India is formulated by

Correct Answer: B [Ministry of Finance]

Explanation:

Fiscal policy on taxation, public spending and borrowing is framed by the Ministry of Finance, while monetary policy belongs to the RBI.

9.  
VCGS 2022 · CAGS 2022
Which of the following are the instruments of fiscal policy?
1. Bank rate
2. Public Expenditure
3. Taxation
4. Public debt

Correct Answer: B [2, 3 and 4 only]

Explanation:

Taxation, public expenditure and public debt are fiscal policy instruments, whereas the bank rate is a monetary policy tool of the RBI.

10.  
Group 1 2024
Match the following :
(a) Fiscal Policy – 1. Issue of Currency Notes
(b) Monetary Policy – 2. Rationing of Credit
(c) RBI – 3. Cash Reserve Ratio
(d) Credit Control – 4. Taxation

Correct Answer: A [4 3 1 2]

Explanation:

Taxation belongs to fiscal policy, CRR to monetary policy, currency note issue to the RBI and rationing of credit to selective credit control, giving 4 3 1 2.

11.  
CEGS 2023
The main aim of deficit financing is

Correct Answer: A [Economic Development]

Explanation:

Deficit financing, covering a spending gap by borrowing from the RBI or creating money, is used mainly to fund development in developing countries.

12.  
Group 1 2024
The effect of deficit financing is

Correct Answer: A [Increase in money supply]

Explanation:

Deficit financing creates new money, so it increases the money supply and, if excessive, causes inflation.

13.  
CTS (Interview Posts) 2024
(a) Capital market deals with long term financial instruments.
(b) Money market deals with short term financial instruments.
Which is correct?

Correct Answer: A [Both (a) and (b) are correct]

Explanation:

The capital market deals in long-term instruments such as shares and debentures, while the money market deals in short-term instruments such as treasury bills, so both statements are correct.

14.  
CTS (ITI Posts) 2025
Consider the statements :
(a) The essence of a budget is the balancing of revenue and expenditure.
(b) Budget is a means of policy implementation.

Correct Answer: B [Both (a) and (b) are true]

Explanation:

A budget balances estimated revenue and expenditure for a financial year and is also a key instrument for implementing government policy, so both statements are true.

15.  
CTS (Interview Posts) 2026
Match the budget deficits 2025-2026 with respective percentage to GDP :
(a) Fiscal deficit – 1. 0.3%
(b) Revenue deficit – 2. 4.4%
(c) Effective revenue deficit – 3. 0.8%
(d) Primary deficit – 4. 1.5%

Correct Answer: C [2 4 1 3]

Explanation:

In Budget 2025-26 the fiscal deficit is 4.4% of GDP, revenue deficit 1.5%, effective revenue deficit 0.3% and primary deficit 0.8%, giving 2 4 1 3.

? Full explanations with tables – Indian Economy PYQ book (₹149): www.shanmugamiasacademy.in/study-materials/tnpsc-indian-economy-pyq

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