JAIIB 1st Exam: Indian Economy & Indian Financial System | IE and IFS JAIIB MCQ PDF: In this article, we are going to cover the important mcqs of indian economy and indian financial system (IE and IFS), which is paper 1 of the JAIIB exam.
Module A: Indian Economic Architecture
Q1. The Indian economy is best described as:
a) Socialist economy
b) Capitalist economy
c) Mixed economy
d) Agrarian economy
Answer: c) Mixed economy ✅
Q2. Which replaced the Planning Commission in 2015?
a) RBI
b) NITI Aayog
c) Finance Commission
d) SEBI
Answer: b) NITI Aayog ✅
Q3. The 1st Five-Year Plan (1951–56) focused mainly on:
a) Agriculture & irrigation
b) Heavy industries
c) Transport & power
d) Defence
Answer: a) Agriculture & irrigation ✅
Q4. The 2nd Five-Year Plan was based on:
a) Harrod-Domar model
b) Mahalanobis model
c) Keynesian model
d) Fisher model
Answer: b) Mahalanobis model ✅
Q5. Which sector currently contributes the largest to GDP in India?
a) Agriculture
b) Industry
c) Services
d) Manufacturing
Answer: c) Services ✅
Q6. Priority Sector Lending (PSL) target for scheduled commercial banks is:
a) 20%
b) 30%
c) 40%
d) 50%
Answer: c) 40% ✅
Q7. MSMEs are classified based on:
a) Employees & turnover
b) Investment & turnover
c) Profits
d) Tax paid
Answer: b) Investment & turnover ✅
Q8. The body responsible for MSME development is:
a) NABARD
b) SIDBI
c) SEBI
d) EXIM Bank
Answer: b) SIDBI ✅
Q9. Which of the following is part of social infrastructure?
a) Roads
b) Railways
c) Schools
d) Ports
Answer: c) Schools ✅
Q10. Which year introduced major LPG (Liberalisation, Privatisation, Globalisation) reforms?
a) 1985
b) 1991
c) 1995
d) 2001
Answer: b) 1991 ✅
Q11. FDI stands for:
a) Foreign Deposit Investment
b) Foreign Direct Investment
c) Foreign Debt Inclusion
d) Federal Direct Investment
Answer: b) Foreign Direct Investment ✅
Q12. Which organisation regulates India’s foreign trade?
a) RBI
b) EXIM Bank
c) DGFT
d) SEBI
Answer: c) DGFT ✅
Q13. WTO was established in:
a) 1985
b) 1991
c) 1995
d) 2000
Answer: c) 1995 ✅
Q14. IMF headquarters is located at:
a) Geneva
b) Washington DC
c) Paris
d) London
Answer: b) Washington DC ✅
Q15. Which organisation publishes the World Development Report?
a) IMF
b) World Bank
c) WTO
d) UNDP
Answer: b) World Bank ✅
Q16. India became a member of IMF in:
a) 1944
b) 1945
c) 1947
d) 1950
Answer: c) 1947 ✅
Q17. Which sector is called the backbone of the Indian economy?
a) Services
b) Agriculture
c) Industry
d) Transport
Answer: b) Agriculture ✅
Q18. Which international institution provides long-term development loans?
a) IMF
b) World Bank
c) WTO
d) SEBI
Answer: b) World Bank ✅
Q19. The “Look East Policy” of India focuses on:
a) Europe
b) Africa
c) South-East Asia
d) South America
Answer: c) South-East Asia ✅
Q20. Which Act governs FDI & forex in India today?
a) FERA
b) FEMA
c) RBI Act
d) SEBI Act
Answer: b) FEMA ✅
Q21. Disinvestment policy is related to:
a) Selling shares in PSUs
b) Cutting subsidies
c) Export promotion
d) Import duties
Answer: a) Selling shares in PSUs ✅
Q22. India’s GST was launched in:
a) 2015
b) 2016
c) 2017
d) 2018
Answer: c) 2017 ✅
Q23. Who prepares the Economic Survey of India?
a) NITI Aayog
b) Ministry of Finance
c) RBI
d) SEBI
Answer: b) Ministry of Finance ✅
Q24. Which sector is MOST employment-intensive?
a) Services
b) Industry
c) Agriculture
d) Mining
Answer: c) Agriculture ✅
Q25. India’s foreign trade policy is framed for a duration of:
a) 2 years
b) 3 years
c) 5 years
d) 10 years
Answer: c) 5 years ✅
Q26. HDI (Human Development Index) is published by:
a) IMF
b) World Bank
c) UNDP
d) WTO
Answer: c) UNDP ✅
Q27. The economic indicator “IIP” stands for:
a) Indian Industrial Programme
b) Index of Industrial Production
c) International Industrial Plan
d) Income & Investment Pattern
Answer: b) Index of Industrial Production ✅
Q28. The organisation that controls global trade disputes is:
a) IMF
b) World Bank
c) WTO
d) ADB
Answer: c) WTO ✅
Q29. “Golden Quadrilateral” project is related to:
a) Railways
b) Highways
c) Shipping
d) Aviation
Answer: b) Highways ✅
Q30. Which sector is called the sunrise sector of India?
a) Agriculture
b) IT & Services
c) Heavy industries
d) Banking
Answer: b) IT & Services ✅
Module B: Economic Concepts Related to Banking (30 MCQs)
Q1. Which branch of economics studies individual units like households and firms?
a) Macroeconomics
b) Microeconomics
c) Econometrics
d) Development economics
Answer: b) Microeconomics ✅
Q2. Demand for a commodity depends on:
a) Price of the commodity
b) Income of the consumer
c) Prices of substitutes
d) All of the above
Answer: d) All of the above ✅
Q3. The law of demand shows:
a) Positive relation between price & demand
b) Negative relation between price & demand
c) No relation
d) Constant demand
Answer: b) Negative relation ✅
Q4. Equilibrium price occurs when:
a) Demand > Supply
b) Demand < Supply
c) Demand = Supply
d) Demand is zero
Answer: c) Demand = Supply ✅
Q5. Inflation refers to:
a) Rise in wages
b) General rise in prices
c) Fall in prices
d) Increase in demand only
Answer: b) General rise in prices ✅
Q6. “Cost-push inflation” is caused by:
a) Higher wages
b) Increased production costs
c) Supply shocks
d) All of the above
Answer: d) All of the above ✅
Q7. Money is best defined as:
a) Medium of exchange
b) Store of value
c) Unit of account
d) All of the above
Answer: d) All of the above ✅
Q8. Which measure of money supply includes currency + demand deposits + other deposits with RBI?
a) M0
b) M1
c) M2
d) M3
Answer: b) M1 ✅
Q9. Broad money (M3) in India is:
a) M1 + Time deposits
b) M0 + Net demand deposits
c) Currency only
d) Demand deposits only
Answer: a) M1 + Time deposits ✅
Q10. “Liquidity Preference Theory of Interest” was given by:
a) Marshall
b) Keynes
c) Ricardo
d) Adam Smith
Answer: b) Keynes ✅
Q11. Which theory of interest assumes saving = investment?
a) Classical theory
b) Keynesian theory
c) Liquidity theory
d) Fisher’s theory
Answer: a) Classical theory ✅
Q12. The lowest point in a business cycle is called:
a) Boom
b) Recession
c) Depression (Trough)
d) Recovery
Answer: c) Depression ✅
Q13. Fiscal policy relates to:
a) Government spending & taxation
b) Money supply control
c) Export promotion
d) Price regulation
Answer: a) Government spending & taxation ✅
Q14. Monetary policy is controlled by:
a) Finance Ministry
b) RBI
c) SEBI
d) Ministry of Commerce
Answer: b) RBI ✅
Q15. A “deflationary gap” occurs when:
a) Demand > Supply
b) Supply > Demand
c) Demand = Supply
d) Prices keep rising
Answer: b) Supply > Demand ✅
Q16. National Income at market price =
a) NNP at factor cost – Indirect taxes + subsidies
b) GNP – Depreciation
c) GDP + Net factor income from abroad
d) NNP at market price – Depreciation
Answer: a) NNP at factor cost – Indirect taxes + subsidies ✅
Q17. GDP refers to:
a) Value of all goods/services produced within a country
b) Value of goods produced by nationals only
c) Exports of a country
d) Per capita income
Answer: a) Value of all goods/services produced within a country ✅
Q18. Which of the following is NOT part of national income?
a) Rent
b) Wages
c) Illegal income
d) Profits
Answer: c) Illegal income ✅
Q19. Per capita income is calculated by:
a) GDP ÷ Population
b) NNP ÷ Population
c) GNP ÷ Population
d) National Income ÷ Population
Answer: d) National Income ÷ Population ✅
Q20. If GDP is ₹200 lakh crore and population is 140 crore, per capita income =
a) ₹1.2 lakh
b) ₹1.4 lakh
c) ₹1.5 lakh
d) ₹2 lakh
Answer: a) ₹1.2 lakh ✅
Q21. Inflation reduces:
a) Value of money
b) Purchasing power
c) Savings value
d) All of the above
Answer: d) All of the above ✅
Q22. Phillips Curve shows relation between:
a) Inflation & money supply
b) Inflation & unemployment
c) Demand & supply
d) Tax & deficit
Answer: b) Inflation & unemployment ✅
Q23. When government expenditure > revenue, it creates:
a) Fiscal deficit
b) Revenue deficit
c) Budget surplus
d) Trade deficit
Answer: a) Fiscal deficit ✅
Q24. Fiscal deficit is financed by:
a) Borrowings
b) Printing money
c) Taxes
d) Both a & b
Answer: d) Both a & b ✅
Q25. Which is NOT a revenue receipt for government?
a) Taxes
b) Grants
c) Borrowings
d) Fees
Answer: c) Borrowings ✅
Q26. Which body presents the Union Budget in Parliament?
a) RBI Governor
b) Finance Minister
c) Prime Minister
d) President
Answer: b) Finance Minister ✅
Q27. An economic boom is characterised by:
a) High output, low unemployment
b) Low output, high unemployment
c) Stagnation
d) Inflation only
Answer: a) High output, low unemployment ✅
Q28. India follows which type of monetary policy framework?
a) Inflation targeting
b) Employment targeting
c) Growth targeting
d) Deficit financing
Answer: a) Inflation targeting ✅
Q29. Business cycle in economics has how many main phases?
a) 2
b) 3
c) 4
d) 5
Answer: c) 4 ✅ (Expansion, Peak, Recession, Trough)
Q30. The measure of inflation in India commonly used by RBI is:
a) WPI
b) CPI
c) GDP deflator
d) IIP
Answer: b) CPI ✅
Module C: Indian Financial Architecture (30 MCQs)
Q1. The Indian Financial System includes:
a) Financial institutions
b) Financial markets
c) Financial instruments & services
d) All of the above
Answer: d) All of the above ✅
Q2. Which was the first development financial institution in India?
a) IFCI
b) ICICI
c) NABARD
d) SIDBI
Answer: a) IFCI ✅ (established in 1948)
Q3. ICICI was established in:
a) 1952
b) 1955
c) 1965
d) 1970
Answer: b) 1955 ✅
Q4. EXIM Bank of India mainly provides:
a) Agricultural finance
b) Export-import finance
c) Retail loans
d) Housing loans
Answer: b) Export-import finance ✅
Q5. NABARD was established in:
a) 1980
b) 1982
c) 1985
d) 1990
Answer: b) 1982 ✅
Q6. Which Act regulates banking companies in India?
a) RBI Act, 1934
b) Banking Regulation Act, 1949
c) Companies Act, 2013
d) SEBI Act, 1992
Answer: b) Banking Regulation Act, 1949 ✅
Q7. RBI was established in:
a) 1934
b) 1935
c) 1947
d) 1950
Answer: b) 1935 ✅
Q8. Cooperative banks in India are regulated by:
a) RBI only
b) State governments only
c) Both RBI & State governments
d) Ministry of Finance
Answer: c) Both RBI & State governments ✅
Q9. Payment Banks can accept deposits up to:
a) ₹25,000
b) ₹50,000
c) ₹1 lakh
d) ₹2 lakh
Answer: d) ₹2 lakh ✅
Q10. Small Finance Banks are set up mainly to serve:
a) Large corporates
b) Rural & unbanked segments
c) MNCs
d) Exporters
Answer: b) Rural & unbanked segments ✅
Q11. NBFCs are regulated by:
a) SEBI
b) IRDAI
c) RBI
d) Ministry of Finance
Answer: c) RBI ✅
Q12. NBFCs cannot accept:
a) Fixed deposits
b) Savings deposits
c) Loans
d) Hire-purchase business
Answer: b) Savings deposits ✅
Q13. Microfinance mainly provides:
a) Large corporate loans
b) Small loans to poor households
c) Export credit
d) Industrial loans
Answer: b) Small loans to poor households ✅
Q14. SHG stands for:
a) Small Help Group
b) Self Help Group
c) State Housing Group
d) Secure Holding Group
Answer: b) Self Help Group ✅
Q15. JLG in microfinance refers to:
a) Joint Lending Group
b) Joint Liability Group
c) Joint Local Group
d) Joint Legal Group
Answer: b) Joint Liability Group ✅
Q16. IRDAI regulates:
a) Banking
b) Insurance
c) Mutual Funds
d) Pension funds
Answer: b) Insurance ✅
Q17. PFRDA regulates:
a) Insurance companies
b) Pension sector
c) Stock markets
d) Co-operative banks
Answer: b) Pension sector ✅
Q18. Which of the following is a pension scheme?
a) NPS
b) APY
c) Both a & b
d) None
Answer: c) Both a & b ✅
Q19. SEBI was established in:
a) 1988
b) 1992
c) 1995
d) 2000
Answer: b) 1992 ✅ (as statutory body)
Q20. Which body regulates stock exchanges in India?
a) RBI
b) SEBI
c) Ministry of Finance
d) IBA
Answer: b) SEBI ✅
Q21. Which of the following is NOT a function of RBI?
a) Monetary policy
b) Lender of last resort
c) Regulation of insurance sector
d) Currency issue
Answer: c) Regulation of insurance sector ✅
Q22. Indian banking sector reforms were initiated in:
a) 1985
b) 1991
c) 1997
d) 2000
Answer: b) 1991 ✅
Q23. Which of the following is a development financial institution?
a) NABARD
b) SIDBI
c) EXIM Bank
d) All of the above
Answer: d) All of the above ✅
Q24. The largest mutual fund regulator in India is:
a) SEBI
b) RBI
c) NABARD
d) IRDAI
Answer: a) SEBI ✅
Q25. Which authority approves the merger of banks?
a) RBI
b) Ministry of Finance
c) SEBI
d) NCLT
Answer: a) RBI ✅
Q26. Which of the following is NOT an NBFC activity?
a) Leasing
b) Insurance
c) Hire purchase
d) Chit funds
Answer: d) Chit funds ✅
Q27. Which body is known as the “watchdog of Indian insurance”?
a) RBI
b) SEBI
c) IRDAI
d) PFRDA
Answer: c) IRDAI ✅
Q28. Recent mergers of public sector banks were recommended to:
a) Reduce competition
b) Strengthen capital and efficiency
c) Encourage monopolies
d) Only for NPA control
Answer: b) Strengthen capital and efficiency ✅
Q29. Which body regulates chit funds in India?
a) RBI
b) Ministry of Corporate Affairs
c) State governments
d) SEBI
Answer: c) State governments ✅
Q30. Financial sector reforms post-1991 mainly aimed at:
a) Liberalisation & modernisation
b) Nationalisation
c) Closing foreign trade
d) Controlling inflation only
Answer: a) Liberalisation & modernisation ✅
Module D: Financial Products & Services (30 MCQs with Answers)
Q1. Which of the following is a demand deposit?
a) Fixed Deposit
b) Recurring Deposit
c) Savings Account
d) Term Deposit
Answer: c) Savings Account ✅
Q2. Fixed deposits are also known as:
a) Demand deposits
b) Term deposits
c) Current deposits
d) Call deposits
Answer: b) Term deposits ✅
Q3. What is the minimum lock-in period for tax-saving fixed deposits?
a) 1 year
b) 3 years
c) 5 years
d) 10 years
Answer: c) 5 years ✅
Q4. Which of the following accounts is primarily for business people?
a) Savings account
b) Current account
c) Term deposit
d) Loan account
Answer: b) Current account ✅
Q5. CASA deposits mean:
a) Cash & Savings Account
b) Current Account Savings Account
c) Current And Secured Advances
d) Cash Advances and Securities
Answer: b) Current Account Savings Account ✅
Q6. Which is a negotiable instrument?
a) Fixed deposit receipt
b) Cheque
c) Demand draft
d) Bankers’ cheque
Answer: b) Cheque ✅
Q7. Which card allows payment directly from a customer’s bank account?
a) Credit card
b) Debit card
c) Prepaid card
d) Virtual card
Answer: b) Debit card ✅
Q8. Credit card dues are a type of:
a) Secured loan
b) Demand loan
c) Unsecured loan
d) Term loan
Answer: c) Unsecured loan ✅
Q9. Which of these is NOT a digital payment method?
a) NEFT
b) RTGS
c) UPI
d) Cheque
Answer: d) Cheque ✅
Q10. NEFT transactions are settled on:
a) Real-time basis
b) Net basis in half-hourly batches
c) End of day
d) Weekly basis
Answer: b) Net basis in half-hourly batches ✅
Q11. RTGS minimum transaction limit is:
a) ₹1 lakh
b) ₹2 lakh
c) ₹5 lakh
d) No minimum
Answer: b) ₹2 lakh ✅
Q12. UPI stands for:
a) Unified Payments Interface
b) Universal Payment Interchange
c) Unique Payment Identifier
d) User Payment Interface
Answer: a) Unified Payments Interface ✅
Q13. IMPS provides transfer facility:
a) Only during banking hours
b) 24×7, including holidays
c) Only Monday–Friday
d) Only on working days
Answer: b) 24×7, including holidays ✅
Q14. Which of the following is a fund-based credit facility?
a) Bank guarantee
b) Letter of credit
c) Term loan
d) All of the above
Answer: c) Term loan ✅
Q15. A loan where EMI includes both principal & interest is called:
a) Bullet loan
b) Amortised loan
c) Bridge loan
d) Demand loan
Answer: b) Amortised loan ✅
Q16. Which loan is usually given against security of land or house property?
a) Personal loan
b) Car loan
c) Mortgage loan
d) Gold loan
Answer: c) Mortgage loan ✅
Q17. Priority sector lending does NOT include:
a) Agriculture
b) MSMEs
c) Export credit
d) Real estate projects
Answer: d) Real estate projects ✅
Q18. MUDRA loans are available for:
a) Corporates
b) Small entrepreneurs
c) Government departments
d) Exporters
Answer: b) Small entrepreneurs ✅
Q19. Kisan Credit Card is designed for:
a) Industrial workers
b) Farmers
c) Exporters
d) Students
Answer: b) Farmers ✅
Q20. Which insurance product provides risk cover and savings both?
a) Term insurance
b) Whole life insurance
c) Endowment plan
d) Motor insurance
Answer: c) Endowment plan ✅
Q21. ULIP stands for:
a) Universal Life Insurance Policy
b) Unit Linked Insurance Plan
c) Unified Life Investment Policy
d) Unit Level Insurance Policy
Answer: b) Unit Linked Insurance Plan ✅
Q22. Which scheme gives guaranteed pension after 60 years?
a) PMJDY
b) APY
c) PMFBY
d) MUDRA
Answer: b) APY (Atal Pension Yojana) ✅
Q23. Which of these is NOT a mutual fund type?
a) Equity fund
b) Debt fund
c) Hybrid fund
d) Gold bond fund
Answer: d) Gold bond fund ✅
Q24. NAV in mutual funds stands for:
a) Net Asset Value
b) National Asset Valuation
c) Net Annual Value
d) Nominal Asset Value
Answer: a) Net Asset Value ✅
Q25. Sovereign Gold Bonds are issued by:
a) RBI on behalf of Govt. of India
b) SEBI
c) Commercial banks
d) Private companies
Answer: a) RBI on behalf of Govt. of India ✅
Q26. Which of the following is a retirement savings scheme?
a) PPF
b) EPF
c) NPS
d) All of the above
Answer: d) All of the above ✅
Q27. PPF has a lock-in period of:
a) 5 years
b) 10 years
c) 15 years
d) 20 years
Answer: c) 15 years ✅
Q28. Which is the maximum investment allowed per year in PPF?
a) ₹1 lakh
b) ₹1.5 lakh
c) ₹2 lakh
d) ₹2.5 lakh
Answer: b) ₹1.5 lakh ✅
Q29. Which type of banking provides doorstep services?
a) Retail banking
b) Wholesale banking
c) Relationship banking
d) Mobile/Internet banking
Answer: d) Mobile/Internet banking ✅
Q30. Financial inclusion mainly focuses on:
a) Big corporations
b) Rural & weaker sections
c) High Net-worth Individuals
d) Urban salaried class
Answer: b) Rural & weaker sections ✅