Key Concepts & Formulas

10 Practice MCQs

Q1. What is the main source of revenue for Indian Railways? A) Freight traffic B) Passenger tickets C) Catering services D) Parcel services

Answer: A) Freight traffic

Solution: Indian Railways earns approximately 65-70% of its revenue from freight transportation, mainly coal, steel, cement, and food grains.

Shortcut: Remember “F” for Freight = First in revenue

Concept: Economics - Sources of revenue for public sector enterprises

Q2. If a train ticket costs ₹500 and the GST rate is 5%, what is the total amount payable? A) ₹525 B) ₹520 C) ₹530 D) ₹515

Answer: A) ₹525

Solution: GST amount = 500 × 5/100 = ₹25 Total amount = 500 + 25 = ₹525

Shortcut: For 5%, divide by 20 (500÷20=25)

Concept: Economics - Tax calculation

Q3. Which Five Year Plan focused on “Garibi Hatao” (Remove Poverty)? A) 3rd Plan B) 4th Plan C) 5th Plan D) 6th Plan

Answer: C) 5th Plan (1974-79)

Solution: The 5th Five Year Plan (1974-1979) was focused on poverty removal and minimum needs program.

Shortcut: Remember 5th = Five (F) for Focus on Poverty

Concept: Economics - Five Year Plans

Q4. Indian Railways earned ₹1,20,000 crores in 2022-23 with 8% growth from previous year. What was the previous year’s revenue? A) ₹1,11,111 crores B) ₹1,10,000 crores C) ₹1,12,500 crores D) ₹1,09,090 crores

Answer: A) ₹1,11,111 crores

Solution: Let previous year = x 1,20,000 = x × 1.08 x = 1,20,000 ÷ 1.08 = ₹1,11,111 crores

Shortcut: Reverse growth = Divide by (100+growth)%

Concept: Economics - Percentage calculation

Q5. If railway passenger fares increase by 15% and demand decreases by 6%, what is the price elasticity? A) -0.4 B) -2.5 C) 0.4 D) 2.5

Answer: A) -0.4

Solution: Price Elasticity = % Change in Quantity ÷ % Change in Price = -6% ÷ 15% = -0.4

Shortcut: Elasticity = Q change ÷ P change (always negative for normal goods)

Concept: Economics - Price elasticity of demand

Q6. A railway employee’s basic pay is ₹35,000. With DA at 42% and HRA at 24%, what is the gross salary? A) ₹58,100 B) ₹56,700 C) ₹54,250 D) ₹52,400

Answer: A) ₹58,100

Solution: DA = 35,000 × 0.42 = ₹14,700 HRA = 35,000 × 0.24 = ₹8,400 Gross = 35,000 + 14,700 + 8,400 = ₹58,100

Shortcut: Gross = Basic × (1 + DA% + HRA%)

Concept: Economics - Salary components

Q7. India’s GDP is ₹200 lakh crores with 1.4 billion population. What is per capita income in USD if 1 USD = ₹80? A) $1,786 B) $1,875 C) $1,950 D) $2,125

Answer: A) $1,786

Solution: Per capita = 200 lakh crores ÷ 140 crores = ₹1.43 lakhs In USD = 1,43,000 ÷ 80 = $1,786

Shortcut: Convert lakhs to thousands by adding zeros

Concept: Economics - Per capita income calculation

Q8. Railway freight rates increased from ₹1,000 to ₹1,200 per tonne, reducing coal transportation from 50 million to 45 million tonnes. Calculate total revenue change. A) +₹4,000 crores B) +₹3,500 crores C) +₹4,500 crores D) +₹3,000 crores

Answer: A) +₹4,000 crores

Solution: Old revenue = 50 million × 1,000 = ₹50,000 crores New revenue = 45 million × 1,200 = ₹54,000 crores Change = +₹4,000 crores

Shortcut: Calculate both scenarios separately

Concept: Economics - Revenue analysis

Q9. If the multiplier effect is 2.5 and Indian Railways invests ₹10,000 crores in infrastructure, what is the total impact on GDP? A) ₹25,000 crores B) ₹15,000 crores C) ₹35,000 crores D) ₹40,000 crores

Answer: A) ₹25,000 crores

Solution: Total impact = Initial investment × Multiplier = ₹10,000 × 2.5 = ₹25,000 crores

Shortcut: Multiplier effect = Direct multiplication

Concept: Economics - Fiscal multiplier

Q10. A station earns ₹50 lakhs monthly from 2 lakh passengers. If price elasticity is -0.5 and fares increase by 20%, what will be new monthly revenue? A) ₹54 lakhs B) ₹56 lakhs C) ₹52 lakhs D) ₹48 lakhs

Answer: A) ₹54 lakhs

Solution: Demand falls by: 20% × 0.5 = 10% New passengers: 2 lakh × 0.9 = 1.8 lakh New fare: ₹250 × 1.2 = ₹300 New revenue: 1.8 lakh × 300 = ₹54 lakhs

Shortcut: Revenue = (Original × New price ratio) × (1 - Elasticity × Price change)

Concept: Economics - Elasticity and revenue relationship

5 Previous Year Questions

PYQ 1. What is the current repo rate set by RBI? [RRB NTPC 2021 CBT-1]

Answer: B) 6.50%

Solution: As of 2024, RBI has maintained the repo rate at 6.50% since April 2023.

Exam Tip: Always check current rates before exam - RBI rates change frequently

PYQ 2. Which is NOT a component of India’s current account in Balance of Payments? [RRB Group D 2022]

Answer: C) FII investments

Solution: Current account includes: Trade balance, Services, Transfers, Investment income. FII investments come under capital account.

Exam Tip: Remember “T-S-T-I” for current account components

PYQ 3. Calculate inflation if CPI was 150 last year and 165 this year. [RRB ALP 2018]

Answer: A) 10%

Solution: Inflation = (165-150)/150 × 100 = 10%

Exam Tip: Always use previous year as base for percentage calculation

PYQ 4. Indian Railways’ operating ratio of 98% means: [RRB JE 2019]

Answer: B) ₹98 spent for every ₹100 earned

Solution: Operating ratio = Operating expenses ÷ Revenue × 100. Lower is better.

Exam Tip: OR <90% is considered healthy for railways

PYQ 5. If nominal GDP grows by 12% and real GDP by 8%, the implied inflation is: [RPF SI 2019]

Answer: A) 4%

Solution: Nominal GDP = Real GDP + Inflation (approximately) Inflation ≈ 12% - 8% = 4%

Exam Tip: This is the GDP deflator method of calculating inflation

Speed Tricks & Shortcuts

Common Mistakes to Avoid

Quick Revision Flashcards

Topic Connections

Direct Link:

• Budget announcements → Railway allocations
• Economic surveys → Infrastructure spending
• GST rates → Ticket pricing

Combined Questions:

• Economics + Current Affairs (Railway budget)
• Economics + Geography (freight corridors)
• Economics + Maths (profit-loss, percentages)

Foundation For:

• Economic planning and policy
• Infrastructure development concepts
• Public sector economics