UPSC Prelims 2026: Economy MCQs & Solutions

1. Consider the following statements regarding the India-UK FTA:

Statement 1: The India-UK FTA ensures comprehensive market access for goods across all sectors...
Statement 2: India will benefit from tariff elimination on approximately 99 per cent of tariff lines...

(a) Both correct, St 2 explains St 1
(b) Both correct, St 2 does not explain St 1
(c) St 1 correct, St 2 incorrect
(d) St 1 incorrect, St 2 correct

Solution: Correct Answer: (d)
Sensitive sectors usually have exceptions, making St 1's "all sectors" claim incorrect.

2. With reference to new railway lines, consider the following pairs:

• 1. Bairabi-Sairang – Mizoram
• 2. Sivok-Rangpo – Sikkim
• 3. Dimapur-Kohima – Arunachal Pradesh

How many pairs are correct?

(a) Only one
(b) Only two
(c) All three
(d) None

Solution: Correct Answer: (b) Only two
Dimapur-Kohima connects Nagaland, not Arunachal Pradesh.

3. With reference to the Repo Rate:

• 1. RBI increases repo rate to encourage activity.
• 2. Banks parking cash with RBI is called repo rate.
• 3. RBI decreases repo rate to control inflation.

(a) Only one
(b) Only two
(c) All three
(d) None

Solution: Correct Answer: (d) None
All statements are inverted. Decreasing rates encourages activity; increasing them controls inflation.

4. RBI directions on no pre-payment charges for loans up to Rs 50 lakh apply to:

(a) 1 and 2 only
(b) 1 and 4 only
(c) 2, 3 and 4
(d) 1, 2, 3 and 4

Solution: Correct Answer: (d) All are covered.

5. With reference to synthetic rubber:

• 1. Malaysia is a top exporter.
• 2. Imports impact natural rubber prices in India.

(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither

Solution: Correct Answer: (c) Both 1 and 2

6. Why was the 2019 Nobel in Economics awarded to Banerjee, Duflo, and Kremer?

(a) experimental approach to alleviating global poverty
(b) institutional studies
(c) auction theory

Solution: Correct Answer: (a) Poverty alleviation via RCTs.

7. Regarding PMMY (MUDRA):

• 1. Loans up to 20 lakh for Tarun category.
• 2. Loans given by RRBs, SFBs, and NBFCs.

(a) 1 only
(b) 2 only
(c) Both 1 and 2

Solution: Correct Answer: (c) Both are correct.

8. Nodal agency for Garib Kalyan Rojgar Abhiyaan?

(a) Ministry of Rural Development
(b) DEA
(c) Labour Dept

Solution: Correct Answer: (a) Ministry of Rural Development.

9. Factors for minimum wage in India?

1. Nature of work | 2. Skill | 3. Cost of living | 4. Health/Education

(a) 1 & 2
(b) 1, 2, 3
(c) 2, 3, 4
(d) All four

Solution: Correct Answer: (d) All of these are considered.

10. Statement 1: PSB MSME NPA ratio declined in 2024-25.
Statement 2: Due to volume increase and absolute bad loan fall.

(a) Both correct + explanation
(b) Both correct, no explanation

Solution: Correct Answer: (a) Both are correct.