UPSC Economy Important Questions for Prelims and Mains Exams

Home

Author at PW

October 23, 2025

UPSC Economy Important Questions help you prepare well for the upcoming Union Public Service Commission Preliminary Examination. The economy section is an important part of Paper 1, General Studies Syllabus, where questions are asked from both static topics and current events related to India’s economic growth and development. Understanding important concepts like GDP, inflation, fiscal policy, taxation, and government schemes can help students answer UPSC prelims economics questions with confidence in the upcoming exam.

UPSC prelims economy questions mainly test how well you understand the country’s financial system, government policies, and economic reforms. Topics such as sustainable development, poverty, inclusive growth, and social sector initiatives were also repeated in the UPSC 2025 prelims economy questions. So, keep reading to explore the UPSC economy important questions.

Check out: UPSC CSE Books

UPSC Economy Syllabus

UPSC Economy important questions are based on the topics mentioned in the General Studies (GS) Paper 1 UPSC Syllabus. To answer these questions effectively, you must first understand what concepts of the economy are covered in the UPSC syllabus.

Knowing the syllabus helps you focus on the right topics, revise important concepts, and answer UPSC prelims economy questions well. Once you understand what to study, you can easily identify the types of UPSC prelims economy questions that are likely to appear in the upcoming exam.

UPSC Prelims Economy Syllabus
Topics	Subtopics
Introduction to Economics	Definition and scope of economics Basic concepts Role of State in an Economy Sectors of an Economy Types of Economies Idea of National Income- GDP, NDP, GNP, NNP, Cost and Price of National Income Comparing GVA & GDP Characteristics of the Indian Economy
Macroeconomics	Gross Domestic Product (GDP) Unemployment Inflation Fiscal Policy Monetary Policy Economic Growth Exchange Rates
Microeconomics	Supply and Demand Market Structures (Perfect Competition, Monopoly, Oligopoly, Monopolistic Competition) Elasticity Consumer Behaviour Producer Behavior Market Failures
Growth, Development and Happiness	Economic growth vs. development Measurement of development Insights into Human Behaviour, Social Norms, Culture and Development, Values and Economics
Evolution of the Indian Economy	Pre-independence economy Post-independence economy Prime Moving Force: Agriculture vs. Industry Planned and Mixed Economy Economic reforms since independence
Economic Planning	Concept of economic planning Different Types of Economic Planning Objectives and Strategies Five-Year Plans, Twenty-Point Programme, MPLADS
Planning in India	Pioneer Plans: The Visvesvaraya Plan, The Congress Plan, The Bombay Plan, The Gandhian Plan, The People's Plan, The Sarvodaya Plan. Planning Commission and Its Functions NDC Grassroot Planning NITI Aayog and Its Functions Inclusive Growth Resource Mobilisation Investment Models
Economic Reforms	Washington Consensus Mixed Economy Obligatory Reform Measures The LPG-Liberalisation Privatisation Globalisation Reforms in India Generations of Economic Reforms Disinvestment New economic policies
Inflation and Business Cycle	Causes and types of inflation Measurement Effects Business cycle theory Inflationary Gap, Deflationary Gap, Inflation Tax, Inflation Spiral, Inflation Accounting, Inflation Premium, Phillips Curve, Reflation, Stagflation. Skewflation, GDP Deflator, Base Effect, Effects of Inflation. WPI and CPI Producer Price Index, Housing Price Index, and Service Price Index.
Agriculture and Food Management	Cropping System and Types of Crops in India Agricultural Policies Green Revolution Minimum Support Price Market Intervention Scheme Procurement Prices Issue Price Economic Cost of Foodgrains Open Market Sale Scheme Price Stabilisation Fund Agriculture Marketing, Model APMC Act, Model Contract Farming Act Irrigation, Farm Mechanisation, Seed Development, Fertilisers, Pesticides, Agri-Credit WTO and the Indian Agriculture: Prospects and Challenges, WTO and Agricultural Subsidies AMS National Food Security Act, Climate Smart Agriculture
Industry and Infrastructure	Industrial development Industrial Policies Upto 1986, New Industrial Policy, 1991 Disinvestment Types of Disinvestment Current Disinvestment Policy Proceeds of Disinvestment: Debate Concerning the Use. MSME Sector, Ease of Doing Business Make in India Start-up India Indian Infrastructure, UDAY Scheme, Railways, Roads, Civil Aviation, Smart Cities Private Sector and Urbanisation PPP Models Concerns of Petroleum Sector Renewable Energy Logistics Sector Housing Policy, PMAY-U National Infrastructure Pipeline
Services Sector	Growth and contribution IT and ITES Sector Tourism industry Offshore Fund Management, Global Negotiations WTO Negotiations Bilateral Agreements
Indian Financial Market	Indian Money Market, Financial intermediaries Mutual Funds DFHI, Indian Capital Market Project Financing 1. Financial Institutions 2. Banking Industry 3. Insurance Industry 4. Security Market Financial Regulation in India, Establishment of FSDC
Banking in India	Types of banks RBI and its functions RBI's Reserves & Surplus Capital, Cash Reserve Ratio Statutory Liquidity Ratio Bank Rate Repo Rate Long Term Repo Reverse Repo Rate Marginal Standing Facility (MSF) Other Tools Base Rate MCLR Nationalisation and Development of Banking in India, Regional Rural Banks (RRBs), Co-operative Banks, Financial Sector Reforms, Banking Sector Reforms REsolution of NPAs and Stressed ASSETS SARFAESI Act, 2002, Capital Adequacy Ratio, Basel III Compliance of the PSBs & RRBs Non-Resident Indian Deposits, Nidhi, Chit Fund, Small & Payment Banks, Financial Inclusion Gold Investment Schemes Mudra Bank
15. Insurance in India	Types of insurance IRDA and regulation Insurance penetration in India LIC and GIC Public Sector Insurance Companies Reinsurance, Deposit Insurance and Credit Guarantee Corporation (DICGC), Export Credit Guarantee Corporation (ECGC), National Export Insurance Account (NEIA) New Insurance Schemes
Security Market in India	Stock exchanges and Important Terms of the Stock Market Primary and Secondary Markets IPOs Mutual funds SEBI and regulation, Commodity Trading, Spot Exchanges in India Foreign Financial Investment, Angel Investor, QFIs Scheme, Participatory Notes (PNs) Credit Default Swap (CDS), Securitisation, Corporate Bond in India, Inflation-Indexed Bonds, Gold Exchange Traded Funds
External Sector in India	Foreign trade policy Definitions of Forex Reserves, External Debt, Fixed Currency Regime, Floating Currency Regime, Managed Exchange Rates, Foreign Exchange Market, Exchange Rate in India, Trade Balance, Trade Policy, Depreciation, Devaluation, Revaluation, Appreciation, Current Account, Capital Account, Balance of Payment (BoP) Convertibility in India LERMS, NEER, REER Hard Currency, Soft Currency, Hot Currency, Heated Currency Cheap currency, Dear Currency Special Economic Zone ECB Liberalised New Foreign Trade Policy,
International Economic Organisations & India	IMF World Bank WTO BRICS India's role and memberships Asian Development Bank Nairobi Negotiations & India Buenos Aires Conference and India Trade Facilitation By India BRICS Bank Asian Infrastructure Investment Bank
Tax structure in India	Incidence of Tax and Impact of Tax Direct and indirect taxes Progressive Taxation, Regressive Taxation, Proportional Taxation VAT and GST Commodities Transaction Tax, Securities Transaction Tax Capital Gains Tax, Minimum Alternate Tax Corporate Tax, Reform, Dividend Distribution Tax, Tax Expenditure Collection Rate Income and Consumption Analysis Tax reforms Tax administration in India
Public Finance in India	Developmental and Non-developmental Expenditure Plan and Non-Plan Expenditure Tax and Non-tax Revenue Receipts Revenue Budget, Revenue and Non-revenue Receipts, Revenue Expenditure Revenue Deficit, Effective Revenue Deficit, Capital Budget, Capital Receipts, Capital Expenditure, Capital Deficit Fiscal Deficit, Primary Deficit, Primary Surplus, Monetised Deficit, Deficit and Surplus Budget Government budgeting, Types of Budgets, Golden Rule, Balanced Budget, Gender Budgeting Public Debt, Independent Debt Management, Central Government Debt FRBM Act, 2003. Means of Deficit Financing Fiscal Policy and Deficit Financing in India
Sustainability and Climate Change: India and the World	Environmental policies Green Finance, Climate Finance, Green Climate Fund, Global Environment Facility, INDCs, Climate change mitigation and adaptation Renewable Energy Sustainable development
Human Development in India	Health and education indicators Demographics, Socio-Economic and Caste Census, Education for All, Skill Development, Employment Scenario in India Burden of Diseases, Health for All, Drinking Water & Sanitation Social welfare schemes Poverty alleviation programs Other Development Indicators
Economic Survey 2024	Overview of key economic indicators, Government policies and initiatives
Union Budget 2026-2026	Budgetary allocations, Tax proposals, Economic outlook

Check out: UPSC Previous Year Papers

UPSC Economy Important Questions

UPSC Economy important questions include many topic-wise past year questions, including UPSC 2025 prelims economics questions. Going through these questions helps you understand the type of questions and key concepts that are mostly asked in the exam.

By solving the UPSC 2025 economics question papers, you can get a clear idea about the difficulty level and question format of recent years. Here are some of the topic-wise UPSC Economy important questions that were asked in the past examination. Try to solve them on your own to know how well-prepared you are.

Topic-wise UPSC Prelims Economy Questions With Answers

As per the previous year's exam analysis, some topics in the Economy section are asked by UPSC again and again in the Prelims exam. To understand these repeated concepts well, try solving as many questions as possible. Here are a few UPSC prelims economy questions on such important topics:

1. Inflation Question:

Question: Which one of the following is likely to be the most inflationary in its effects? (2021)

(a) Repayment of public debt
(b) Borrowing from the public to finance a budget deficit
(c) Borrowing from the banks to finance a budget deficit
(d) Creation of new money to finance a budget deficit

Ans: d

2. Money Market Question:

Question. Consider the following statements: (2021) Other things remaining unchanged, market demand for a good might increase if:

(a) Price of its substitute increases
(b) Price of its complement increases
(c) The good is an inferior good, and the income of the consumer increases.
(d) Its price falls

Which of the above statements are correct?

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

Ans: a

3. Economic Reforms Question:

Question. With reference to the Indian economy after the 1991 economic liberalisation, consider the following statements:

Worker productivity (Rs. per worker at 2004-05 prices) increased in urban areas while it decreased in rural areas.
The percentage share of rural areas in the workforce steadily increased.
In rural areas, the growth in the non-farm economy increased.
The growth rate in rural employment decreased.

Which of the statements given above is/are correct? (2020)

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

Ans: b

4. Public Investment Question:

Question. In India, which of the following can be considered as public investment in agriculture? (2020)

Fixing Minimum Support Price for agricultural produce of all crops.
Computerisation of Primary Agricultural Credit.
Social Capital Development.
Free electricity supply to farmers.
Waiver of agricultural loans by the banking system.
Setting up cold storage facilities by the governments.

Select the correct answer using the code given below.

(a) 1, 2 and 5 only
(b) 1, 3, 4 and 5 only
(c) 2, 3 and 6 only
(d) 1, 2, 3, 4, 5 and 6

Ans: c

5. International Agreements/WTO Question:

Question. With reference to Trade-Related Investment Measures (TRIMS), which of the following statements is/are correct? (2020)

Quantitative restrictions on imports by foreign investors are prohibited.
They apply to investment measures related to trade in both goods and services.
They are not concerned with the regulation of foreign investment.

Select the correct answer using the code given below:

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

Ans: a

6. Banking Question:

Question. With reference to the Banks Board Bureau (BBB), which of the following statements are correct?

The Governor of RBI is the Chairman of BBB.
BBB recommends for the selection of heads for Public Sector Banks.
BBB helps the Public Sector Banks in developing strategies and capital-raising plans.

Select the correct answer using the code given below:

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

Ans: b

7. Monetary Policy Question:

Question. In India, which one of the following is responsible for maintaining price stability by controlling inflation?

(a) Department of Consumer Affairs
(b) Expenditure Management Commission
(c) Financial Stability and Development Council
(d) Reserve Bank of India

Ans: d

8. Exchange Rate Question:

Question. With reference to the Indian economy, consider the following statements:

An increase in the Nominal Effective Exchange Rate (NEER) indicates the appreciation of the rupee.
An increase in the Real Effective Exchange Rate (REER) indicates an improvement in trade.
An increasing trend in domestic inflation relative to inflation in other countries is likely to cause an increasing divergence between NEER and REER.

Which of the statements are correct?

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

Ans: c

To get more UPSC Economy important questions with simple and clear concept explanations, you can use the PW UPSC Books. These books cover the complete UPSC exam syllabus in an easy-to-understand way. They include visual learning resources that help you revise quickly and remember key points better. The simplified visuals and diagrams make even tough economic topics easy to understand.

Along with this, the books provide comprehensive topic coverage and a quick overview of complex concepts that help you strengthen your basics and prepare confidently for the upcoming UPSC Prelims. Find the link to check out the PW UPSC books below.

PW UPSC Books for Economics
UPSC Mindmaps Economy	PDF
UPSC Mindmaps Economy (Hindi)	PDF
UPSC Economics and Social Development Combo Set of 3	PDF
UPSC CSAT Wallah 10 Previous Years Solved Questions	PDF

UPSC Prelims 2025 Economy Questions

In the UPSC Prelims 2025, around 14 questions were asked from the Economics section. These included both concept-based and calculation-based questions. Check out the UPSC prelims 2025 economy questions here:

Question. 1. With reference to investments, consider the following:

(a) Bonds

(b) Hedge Funds

(d) Venture Capital

How many of the above are treated as Alternative Investment Funds?

(a) Only one

(b) Only two

(d) All four

Question. 2. Which of the following are the sources of income for the Reserve Bank of India?

I. Buying and selling Government bonds

II. Buying and selling foreign currency

III. Pension fund management

IV. Lending to private companies

V. Printing and distributing currency notes

Select the correct answer using the code given below.

(a) I and II only

(b) II, III and IV

(d) II and V

Question. 3. Consider the following statements:

I. The Reserve Bank of India mandates all the listed companies in India to submit a Business Responsibility and Sustainability Report (BRSR).

II. In India, a company submitting a BRSR makes disclosures in the report that are largely non-financial in nature.

Which of the statements given above is/are correct?

(a) I only

(b) II only

(d) Neither I nor II

Question. 4. Consider the following statements:

Statement I: In India, income from allied agricultural activities like poultry farming and wool rearing in rural areas is exempted from any tax.

Statement II: In India, rural agricultural land is not considered a capital asset under the provisions of the Income-tax Act, 1961.

Which one of the following is correct in respect of the above statements?

(a) Both Statement I and Statement II are correct, and Statement II explains Statement I

(b) Both Statement I and Statement II are correct, but Statement II does not explain Statement I

(d) Statement I is not correct, but Statement II is correct

Question. 5. Consider the following statements:

Statement I: As regards returns from an investment in a company, generally, bondholders are considered to be relatively at lower risk than stockholders.

Statement II: Bondholders are lenders to a company, whereas stockholders are its owners.

Statement III: For repayment purposes, bondholders are prioritised over stockholders by a company.

Which one of the following is correct in respect of the above statements?

(a) Both Statement II and Statement III are correct, and both of them explain Statement I

(b) Both Statement I and Statement II are correct, and Statement I explains Statement II

(d) Neither Statement II nor Statement III is correct

Question. 6. Consider the following statements:

I. India accounts for a very large portion of all equity option contracts traded globally, thus exhibiting a great boom.

II. India's stock market has grown rapidly in the recent past, even overtaking Hong Kong's at some point in time.

III. There is no regulatory body either to warn the small investors about the risks of options trading or to act on unregistered financial advisors in this regard.

Which of the statements given above are correct?

(a) I and Il only

(b) II and III only

(d) I, II and III

Question. 7. Consider the following statements:

Statement I: Circular economy reduces the emissions of greenhouse gases.

Statement II: Circular economy reduces the use of raw materials as inputs.

Statement III: Circular economy reduces wastage in the production process.

Which one of the following is correct with respect of the above statements?

(a) Both Statement II and Statement III are correct, and both of them explain Statement I

(b) Both Statement II and Statement III are correct, but only one of them explains Statement I

(d) Neither Statement II nor Statement III is correct

Question. 8. Consider the following statements:

I. Capital receipts create a liability or cause a reduction in the assets of the Government.

II. Borrowings and disinvestment are capital receipts.

III. Interest received on loans creates a liability for the Government.

Which of the statements given above are correct?

(a)I and II only

(b) II and III only

(d) I, II and III

Question. 9. Suppose the revenue expenditure is 80,000 crores and the revenue receipts of the Government are 60,000 crores. The Government budget also shows borrowings of 10,000 crores and interest payments of 6,000 crores. Which of the following statements are correct?

I. Revenue deficit is 20,000 crores.

II. Fiscal deficit is 10,000 crores.

III. Primary deficit is 4,000 crores.

Select the correct answer using the code given below.

(a) I and II only

(b) II and III only

(d) I, II and III

Question. 10. A country's fiscal deficit stands at 50,000 crores. It is receiving 10,000 crores through non-debt-creating capital receipts. The country's interest liabilities are 1,500 crores. What is the gross primary deficit?

(a) 48,500 crores

(b) 51,500 crores

(d) None of the above

Question. 11. Consider the following statements with respect to the International Bank for Reconstruction and Development (IBRD):

I. It provides loans and guarantees to middle-income countries.

II. It works single-handedly to help developing countries reduce poverty.

III. It was established to help Europe rebuild after World War II.

Which of the statements given above are correct?

(a) I and II only

(b) II and III only

(d) I, II and III

Question. 12. Consider the following statements with respect to RTGS and NEFT:

I. In RTGS, the settlement time is instantaneous, while in the case of NEFT, it takes some time to settle payments.

II. In RTGS, the customer is charged for inward transactions, while that is not the case for NEFT.

III. Operating hours for RTGS are restricted on certain days, while this is not true for NEFT.

Which of the statements given above is/are correct?

(a) I only

(b) I and II

(b) I and III

(d) III only

Question. 13. Consider the following countries:

I. United Arab Emirates

II. France

III. Germany

IV. Singapore

V. Bangladesh

How many countries amongst the above are there other than India where international merchant payments are accepted under UPI?

(a) Only two

(b) Only three

(d) All five

Question. 14. Which of the following statements with regard to recommendations of the 15th Finance Commission of India are correct?

I. It has recommended grants of `4,800 crores from the year 2022-23 to the year 2025-26 for incentivising States to enhance educational outcomes.

II. 45% of the net proceeds of Union taxes are to be shared with States.

III. `45,000 crores are to be kept as performance-based incentives for all States for carrying out agricultural reforms.

IV. It reintroduced tax effort criteria to reward fiscal performance.

Select the correct answer using the code given below.

(a) I, II and III

(b) I, II and IV

(d) II, III and IV

Preparing the UPSC economy important questions that were asked in past exams can help you a lot in scoring good marks in this section. Economics in this exam covers both basic concepts and current topics, so practising UPSC prelims economy questions helps you strengthen your understanding and get ready for any type of question in the exam.

Check out: UPSC Modules Books

How to Answer UPSC Prelims Economy Questions Effectively to Score Well

Learning how to answer UPSC prelims economy questions effectively can increase your overall score. These questions test your understanding of basic economic concepts and current developments. Here are some tips to help you answer these questions better:

Understand Basic Concepts: Start with the NCERT books to understand fundamental topics like GDP, inflation, fiscal policy, and government schemes. Clear basics make it easy for you to solve tricky questions.
Include Reliable UPSC Books: Use PW UPSC books to study important concepts and practice different levels of questions.
Analyse Previous Year Questions: Go through UPSC 2025 prelims economics questions and past year papers to understand patterns and frequently asked topics.
Stay Updated with Current Affairs: Link economic concepts with recent government policies, budgets, and economic reforms. This helps in solving questions based on current events.
Practice Topic-wise Questions: Solve questions chapter-wise to strengthen your weak areas and improve speed and accuracy.
Time Management: During the exam, read questions carefully and avoid spending too much time on a single question.
Revise Regularly: Use mind maps, cheat sheets, and summary notes from PW UPSC books for effective revision before the exam.

Also Check, UPSC Question Banks

UPSC Economy Important Questions FAQs

Q.1. Are UPSC prelims economy questions tough to answer?

Ans. UPSC prelims economy questions are not very tough if you have a clear understanding of the basic concepts. With daily practice and revision, you can make this section easier to handle in the exam.

Q.2. How many UPSC prelims economy questions were asked in the 2025 exam?

Ans. In the 2025 UPSC prelims exam, around 14 questions were asked from the economy section, covering topics from both static and current affairs.

Q.3. Is NCERT sufficient to answer UPSC prelims economy questions?

Ans. NCERT books are good for building basic concepts, but for scoring well, you should also refer to detailed economy books by PW. These books explain all key topics simply and include UPSC Economy important questions for practice.

Q.4. Were the UPSC 2025 prelims economics questions difficult?

Ans. As per the past exam analysis, the UPSC 2025 economics questions were of moderate difficulty level. Those who prepared both theory and current topics found these questions manageable.

Q.5. What weightage do UPSC prelims economy questions carry?

Ans. The economy section usually carries a weightage of about 15 to 18% in the UPSC prelims exam, making it one of the most important subjects to focus on during preparation.

Recommended for you

See All