Daily Prelims MCQs - Economy - 10th September 2025
- TPP
- Sep 11
- 7 min read
Welcome to your Daily UPSC Prelims Current Affairs MCQs – 10th September 2025. This is part of our subject-wise daily series where Wednesday is dedicated to Economy, helping you revise key concepts, fiscal/monetary policy linkages, schemes, and macro-indicators—all in UPSC-Prelims style.
Today’s set of 5 carefully designed MCQs blends static–dynamic linkages with crisp explanations to help you:
Strengthen conceptual clarity on core economy terms (bond yields, debt-to-GDP ratio, MPC framework).
Link dynamic reforms like QCOs, BIS certification, and PLI scheme updates with static provisions.
Decode fiscal targets & policy roadmaps (India’s debt sustainability goal, inflation targeting band).
Practice UPSC-style elimination with nuanced traps around institutions, constitutional mandates, and sectoral inclusions/exclusions.
Topics covered today include:
Bond yields: inverse relation with interest rates and borrowing dynamics.
Quality Control Orders (QCOs) and BIS certification framework.
Monetary Policy Committee (MPC): quorum, mandate, and chairman.
Production Linked Incentive (PLI) Scheme: coverage of sectors, especially Automobiles.
Debt-to-GDP Ratio: India’s fiscal consolidation roadmap to 2031.
Stay consistent with these daily quizzes to sharpen your Prelims 2026 preparation, while also reinforcing static Economy through current, exam-relevant cues.
Click Here to read the Monthly Current Affairs Pointers (CAP).
QUESTION 1
Bond yields generally tend to decline under which of the following conditions?
When there is an increase in government borrowing
When the central bank reduces interest rates
When prices of bonds rise
Select the correct answer using the codes given below:
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
Answer (b)
Explanation:
Bond yield refers to the return an investor earns on a bond. It moves inversely to the bond price — that is, when bond prices rise, yields fall, and vice versa.
Normally, bond yields decline when interest rates are cut by the central bank. This is because lower interest rates make existing bonds with higher fixed returns more attractive, increasing demand and pushing up prices — hence, yields fall.
In the context of the Indian economy, even after the Reserve Bank of India (RBI) reduced its repo rate (the rate at which RBI lends money to commercial banks) by 100 basis points (1%) over a seven-month period, bond yields did not fall as expected.
As of a recent update, the 10-year benchmark government bond yield was quoted at 6.60%, slightly down from 6.62% the previous week. However, this is still 26 basis points higher than it was a month earlier.
This unusual rise in bond yields, despite rate cuts, was primarily driven by two factors:
A hawkish stance by RBI on inflation — meaning the central bank is cautious and may not ease policy further if inflation rises.
Concerns over higher government borrowing, particularly due to anticipated tax reforms, which could increase the supply of bonds in the market, putting downward pressure on bond prices and thus raising yields.
Therefore:
Statement 2 is correct: Lower interest rates typically lead to falling yields.
Statement 3 is correct: Rising bond prices result in lower yields.
Statement 1 is incorrect: Higher government borrowing can lead to more bond issuance, increasing supply, reducing prices, and raising yields, not lowering them.
QUESTION 2
With reference to the Quality Control Orders (QCOs), consider the following statements:
1. These are government notifications that make it mandatory for manufacturers to secure BIS certification before selling or importing specified products.
2. They are administered by the Ministry of Finance.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer (a)
Explanation:
As part of a major policy review, a high-level government committee—formed in response to Prime Minister Narendra Modi’s Independence Day speech calling for “next-generation reforms”—is currently evaluating the challenges industries face with the certification process under Quality Control Orders (QCOs).
The committee is headed by Rajiv Gauba, former Cabinet Secretary and current member of NITI Aayog.
Quality Control Orders (QCOs) are legal notifications issued by the Government of India to ensure that certain products comply with prescribed quality and safety standards before being sold, manufactured, or imported.
Under these orders, manufacturers and importers must obtain BIS (Bureau of Indian Standards) certification, which acts as a mark of compliance.
The aim is to protect consumer health, ensure product reliability, and improve the competitiveness of Indian goods.
BIS is India’s national standards body that develops and enforces quality standards across a wide range of sectors. Hence, Statement 1 is correct.
Contrary to the statement, the administration of QCOs does not fall under the Ministry of Finance.
QCOs are typically managed by the relevant line ministries, such as the Ministry of Consumer Affairs, Ministry of Commerce and Industry, or Ministry of Heavy Industries, depending on the product category.
The Bureau of Indian Standards (BIS) operates under the Ministry of Consumer Affairs, Food & Public Distribution, and plays a central role in implementing QCOs. Hence, Statement 2 is incorrect.
QUESTION 3
Which one of the following statements regarding the Monetary Policy Committee (MPC) is not correct?
(a) The MPC can hold meetings with a minimum presence (quorum) of four members.
(b) It is mandatory for the MPC to meet at least four times in a financial year.(c) The government mandates the MPC to maintain Consumer Price Index (CPI) inflation at 4% with a tolerance band of +/- 2%.
(d) The Prime Minister holds the position of Chairman of the MPC in an ex officio capacity.
Answer (d)
Explanation:
In the current Indian economic framework, the Monetary Policy Committee (MPC) plays a vital role in managing inflation and ensuring monetary stability. It was institutionalized through an amendment to the Reserve Bank of India (RBI) Act, 1934, with Section 45ZB forming the legal basis. The first MPC was constituted on September 29, 2016.
Option (a) is correct: According to the RBI Act, for any meeting of the MPC to be valid, at least four out of six members must be present.
Option (b) is correct: The law mandates that the MPC must convene a minimum of four times annually, although it often meets more frequently depending on economic conditions.
Option (c) is correct: As per the current inflation targeting framework, the Government of India has directed the MPC to target CPI-based inflation at 4%, with an acceptable deviation of plus or minus 2% (i.e., a range of 2% to 6%).
Option (d) is incorrect: The term "ex officio" means by virtue of one's office or position. In the case of the MPC, it is not the Prime Minister, but the Governor of the Reserve Bank of India (RBI) who serves as the Chairman ex officio.The Prime Minister has no direct role in the MPC.
QUESTION 4
With reference to the Production Linked Incentive (PLI) Scheme, consider the following statements:
The scheme is designed to strengthen India's manufacturing capabilities and lessen dependence on imported goods.
The Automobile and Auto Components sector has been excluded from the scope of the PLI Scheme.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer (a)
Explanation:
India’s push for economic self-reliance and industrial expansion, the Production Linked Incentive (PLI) Scheme—launched in 2020—plays a central role. It forms a critical part of the Atmanirbhar Bharat Abhiyan (Self-Reliant India Mission) and aligns with the broader Make in India initiative.
The PLI Scheme is not merely a subsidy program. It is a performance-based incentive structure, rewarding domestic manufacturers for achieving specific outcomes, such as increased production, higher sales, or innovation.The core objectives of the PLI Scheme include:
Building a robust domestic manufacturing ecosystem,
Enhancing global competitiveness,
Reducing India’s reliance on imports, and
Promoting job creation and sustainable growth.
The scheme provides financial incentives based on incremental output, thereby encouraging companies to scale up and invest in production. Hence, Statement 1 is correct.
The Automobiles and Auto Components sector is very much included in the PLI Scheme. In fact, it is one of the 14 key sectors targeted by the government under the initiative.
The full list of sectors includes:
Mobile Manufacturing and Electronic Components
Critical Key Starting Materials (KSMs), Drug Intermediaries, and Active Pharmaceutical Ingredients (APIs)
Medical Devices
Automobiles and Auto Components
Pharmaceutical Drugs
Specialty Steel
Telecom and Networking Products
Electronic/Technology Products
White Goods (Air Conditioners and LEDs)
Food Products
Textiles (including MMF & Technical Textiles)
High-Efficiency Solar PV Modules
Advanced Chemistry Cell (ACC) Batteries
Drones and Drone Components
Since Automobiles and Auto Components are part of this strategic focus. Hence, Statement 2 is incorrect.
QUESTION 5
Consider the following statements regarding the Debt-to-GDP Ratio:
It is an indicator that measures a nation’s public debt in comparison to the total value of goods and services it produces in a year.
India has committed to bringing down its debt-to-GDP ratio to 50±1 per cent by the end of March 2031.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer (c)
Explanation:
In the present global economic scenario, debt sustainability is a key concern for developing and developed economies alike. The Debt-to-GDP Ratio is a widely used macroeconomic indicator that helps assess a country's ability to service its debt over time.The Debt-to-GDP Ratio compares a country’s public (government) debt to its Gross Domestic Product (GDP).
It reflects a country's financial health and its ability to repay debt.
The ratio is typically shown as a percentage.
It may also be interpreted as the number of years required to repay debt, assuming the entire GDP is used solely for debt payments.
A lower debt-to-GDP ratio is generally seen as a sign of economic stability. Hence, Statement 1 is correct.
As per recent fiscal policy targets, the Government of India aims to gradually reduce its debt burden.
Currently, India’s debt-to-GDP ratio is around 80%, placing it at 31st globally.
In the long-term fiscal roadmap, the target is to lower this ratio to 50%, with a permissible variation of ±1%, by March 31, 2031.
This objective is part of ensuring fiscal sustainability and macroeconomic stability. Hence, Statement 2 is correct.
Previous Daily UPSC Prelims MCQs Set
Previous Week Current Affairs MCQs Set
Click for NCERTs Pdfs
Click for Daily Quotes:
Stay updated with the latest news by joining our Telegram channel – The PRESS Pad , and follow us on Instagram and X.
Comments