Daily Prelims MCQs - Economy - 6th August 2025
- TPP
- Aug 6
- 8 min read
Welcome to today’s handpicked set of Multiple-Choice Questions (MCQs) from the Economy — crafted specially for the UPSC Prelims! These questions aren’t just a quiz — they’re a smart way to see how current affairs connect with core concepts, just like UPSC asks in the exam.
Each question is based on recent news and backed by clear explanations to help you build strong links between dynamic events and static knowledge.
Today’s topics include: Minimum Wages Act, 1948, MSMEs, Q-commerce, India-EU, ABSS, MGNREGA and more...
Click Here to read the Monthly Current Affairs Pointers (CAP).
QUESTION 1
Which of the following are typically taken into account while determining the minimum wage in India?
The type and complexity of work involved
The skill category of the worker
The prevailing cost of living in the region
Household expenditures on healthcare and education
Select the correct answer using the code below:
(a) 1 and 2 only
(b) 1, 2 and 3 only
(c) 3 and 4 only
(d) 2, 3 and 4 only
Answer (b)
Explanation:
The Minimum Wages Act, 1948 governs the fixation of minimum wages in India. According to this law, the minimum wage set by the central or state governments takes into consideration several key elements:
Nature of work: Different jobs require varying degrees of physical effort, risk, and complexity, which affect wage levels.
Skill level: Wages vary based on whether the work is unskilled, semi-skilled, or skilled.
Cost of living: The wage calculation incorporates the cost of basic necessities, often including basic wages plus the variable dearness allowance to offset inflation and price changes.
However, expenditure on health and education is not yet formally included in minimum wage calculations, although there is growing discussion among policymakers about incorporating these factors into a broader concept called the living wage, which aims to better reflect actual household needs.
Reports, such as one by Quess Corp and the Udaiti Foundation, highlight that low wages failing to meet real living costs contribute to workforce attrition, especially among women, pointing to a gap between statutory minimum wages and living wages.
QUESTION 2
Consider the following statements regarding the performance of public sector banks’ (PSBs) loans to Micro, Small, and Medium Enterprises (MSMEs):
Statement 1: The gross non-performing asset (NPA) ratio for MSME loans from PSBs declined in 2024-25 compared to March 2022.
Statement 2: The reduction in the gross NPA ratio is attributable both to a rise in the total MSME loan portfolio and a decrease in the absolute value of bad loans.
Which of the following is correct?
(a) Both Statement 1 and Statement 2 are true, and Statement 2 correctly explains Statement 1.
(b) Both Statement 1 and Statement 2 are true, but Statement 2 does not explain Statement 1.
(c) Statement 1 is true, but Statement 2 is false.
(d) Statement 1 is false, but Statement 2 is true.
Answer (a)
Explanation:
Public sector banks in India have witnessed a notable improvement in the health of their MSME loan portfolios. Data shared with Parliament by the Ministry of Finance reveals the following:
The gross NPA ratio on MSME loans extended by PSBs fell from 12.8% in March 2022 to 7.99% a year ago, and further down to 6.18% by the end of 2024-25. This confirms that Statement 1 is correct.
The decline in the gross NPA ratio resulted from two factors:
A significant increase in the total MSME loans outstanding — PSB loans to MSMEs reached approximately ₹13.07 lakh crore as of March 31, showing an 11.3% year-on-year growth.
A reduction in the absolute value of non-performing MSME loans, which dropped by 14% from the previous year to ₹80,749 crore.
Since the gross NPA ratio is calculated by dividing the amount of bad loans by the total loans outstanding, an increase in the denominator combined with a decrease in the numerator naturally lowers the ratio. This validates Statement 2 and explains the improvement noted in Statement 1.
QUESTION 3
What does the term "Quick Commerce" (Q-commerce) signify in the contemporary digital economy?
(a) Conducting commercial transactions through social media networks
(b) Making purchases using smart TVs or voice-activated assistants such as Alexa or Google Assistant
(c) Carrying out trade and shopping activities within virtual reality (VR) platforms
(d) The expedited delivery of online orders, typically fulfilled within 10 to 30 minutes
Answer (d)
Explanation:
Quick Commerce, commonly known as Q-commerce, is a fast-growing segment in e-commerce characterized by the ultra-fast delivery of goods ordered online, often within a window of 10 to 30 minutes. This model has surged in popularity, especially with companies such as Blinkit (owned by Eternal Ltd), which recently surpassed Zomato’s food delivery segment in net order value in the first quarter of 2025-26.
To enable such rapid delivery, Q-commerce firms rely heavily on “dark stores” — specialized warehouses stocked like regular retail outlets but closed to the public. These dark stores act as local hubs where orders are quickly picked, packed, and dispatched, allowing firms to maintain swift fulfillment in their operational zones.
India’s top Q-commerce players—Blinkit, Zepto, and Swiggy Instamart—collectively process around 4.3 million orders daily, underscoring the sector’s massive scale and growing consumer acceptance.
QUESTION 4
Regarding the value of the Indian rupee, consider the following statements:
A robust balance of payments (BoP) position contributes to maintaining the stability of the rupee.
The value of the rupee is entirely independent of external influences like the performance of the US dollar.
Which of the above statements is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer (a)
Explanation:
The exchange rate of the Indian rupee is influenced by a combination of domestic macroeconomic factors and global market dynamics.
Statement 1 is correct: A strong BoP position, which includes both the current account (exports and imports of goods and services) and the capital account (foreign investment flows, external borrowings, etc.), supports the rupee’s stability. When the BoP is healthy, it ensures that demand for the rupee remains stable, reducing volatility in the exchange rate.
Statement 2 is incorrect: The value of the Indian rupee is significantly impacted by global factors, especially the strength or weakness of the US dollar. For instance, when the US dollar appreciates, it often puts downward pressure on the rupee, as investors move towards the perceived safety of dollar assets. Other external variables like global crude oil prices, geopolitical tensions, and interest rate changes in advanced economies also influence the rupee's value.
In FY 2023–24, India recorded merchandise exports worth $441.48 billion, while imports were $683.55 billion, resulting in a trade deficit of $242.07 billion. Despite this, interventions by the Reserve Bank of India (RBI)—including buying and selling foreign currency—help prevent extreme depreciation or volatility in the rupee’s value.
QUESTION 5
Concerning the ongoing trade negotiations between India and the European Union (EU), consider the following statements:
As part of the trade discussions, India has permitted full (100%) foreign direct investment (FDI) in the telecom sector specifically for the United Kingdom.
The maximum FDI limit allowed in India’s insurance sector under the agreement has been capped at 49 per cent.
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 and the European Union are currently negotiating a comprehensive trade pact that includes provisions to encourage greater investment inflows and provide long-term regulatory clarity, especially in the domestic manufacturing sector. These efforts are partially driven by shared concerns over China’s industrial overcapacity, particularly in sectors like pharmaceuticals, defence, and electronics.
Key aspects include:
Statement 1 is correct: India has offered 100% FDI in the telecom sector to the UK, as part of a broader strategy to attract Western investments by easing regulatory barriers and offering enhanced market access.
Statement 2 is incorrect: Contrary to the 49% mentioned, the FDI ceiling in the insurance sector has been raised to 74%, offering greater certainty and investment potential for UK-based insurers under the agreement. This aligns with similar commitments made in India’s trade pact with the European Free Trade Association (EFTA).
QUESTION 6
Which of the following most accurately reflects the economic concept of inflation?
(a) A long-term expansion in the availability of goods and services in the economy
(b) A continuous fall in overall price levels, leading to a decline in consumer demand and investment activity
(c) A scenario where prices spiral rapidly—often exceeding 50% monthly—driven by excessive money supply, frequently linked to political upheaval or currency collapse
(d) A persistent and general rise in the price levels of goods and services within an economy over a period of time
Answer (d)
Explanation:
Inflation refers to the rate at which the general price level of goods and services rises within an economy over time, leading to a reduction in the purchasing power of money.
Key aspects include:
It is generally measured using broad price indices such as the Consumer Price Index (CPI), which tracks the cost of a standard basket of goods and services consumed by households.
The percentage change in the CPI over a given time frame is referred to as consumer price inflation, the most commonly used metric to track inflation.
Inflation affects the cost of living, as the same amount of money can now buy fewer goods and services.
Central banks often try to manage inflation by adjusting interest rates and influencing inflation expectations among consumers and businesses.
At times, authorities may also signal temporary restraint in economic activity to control inflation, shaping public expectations to reduce inflationary pressures built into contracts and wages.
QUESTION 7
With reference to the Amrit Bharat Station Scheme (ABSS), consider the following statements:
The scheme envisions a long-term and phased master plan approach for the comprehensive development of railway stations across India.
It encourages the incorporation of regional architectural styles and local cultural elements in station designs.
Which of the above statements is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer (c)
Explanation:
The Amrit Bharat Station Scheme (ABSS) is a major initiative launched to revamp and modernize railway stations across the Indian Railways network. The scheme has a broad and long-term vision, focusing on the progressive development of stations through Master Plans, implemented in phases.
Key components of the scheme include:
Improved station access, waiting lounges, toilets, lifts, escalators, and enhanced cleanliness.
Provision of free Wi-Fi, and kiosks showcasing local products under initiatives like One Station One Product.
Advanced passenger information systems, Executive Lounges, business meeting spaces, and landscaped environments.
Emphasis on station integration with the city on both sides, multi-modal transport connectivity, accessible infrastructure for Divyangjans, eco-friendly technologies, and use of ballastless tracks.
Possibility of constructing Roof Plazas and implementing improvements in a context-specific and feasible manner.
A notable objective is to transform railway stations into urban hubs or vibrant city centres, while also encouraging the inclusion of local architectural aesthetics and cultural themes in the design.
QUESTION 8
Which of the following is not a feature of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)?
(a) It is demand-driven and legally guarantees employment.
(b) It provides 100 days of wage employment to every urban household.
(c) It mandates payment of unemployment allowance if work is not provided within 15 days.
(d) The Electronic Fund Management System (e-FMS) is used to transfer wages.(e) It also promotes active participation of women in the workforce.
Answer (b)
Explanation:
MGNREGA is a rural employment scheme that provides a legal guarantee of 100 days of wage employment per year to every rural household whose adult members are willing to do unskilled manual work.
It is a demand-driven program—work is provided when people ask for it.
If work is not given within 15 days, the applicant is entitled to an unemployment allowance.
Wages are transferred through Electronic Fund Management System (e-FMS) directly into workers’ bank/post office accounts, improving transparency.
The Act also ensures women’s participation by mandating that at least one-third of the workers must be women, promoting gender equity.
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