Questions and answers for exam Preparation

MCQs

Total Questions : 89 | Page 2 of 9 pages

Question 11. Which one of the following statements is an appropriate description of deflation?

It is a persistent fall in the general price level of goods and services
It is a fall in the rate of inflation over a period of time
It is a sudden fall in the value of a currency against other currencies
It is persistent recession in both the financial and real sectors of economy

Discuss Question

Answer: Option A. -> It is a persistent fall in the general price level of goods and services
Answer: (a)

Question 12. In India, in the overall Index of Industrial Production, the indices of eight core industries have a combined weight of 37-90%. Which of the following are among those eight core industries?

Cement
Fertilisers
Natural gas
Refinery products
Textiles

Select the correct answer using the codes given below.

Only 1, 2, 3 and 4
1, 2, 3, 4 and 5
Only 1 and 5
Only 2, 3 and 4

Discuss Question

Answer: Option A. -> Only 1, 2, 3 and 4
Answer: (a)

Question 13. Which of the following is not a ‘Public Good’?

National Defence
Light House
Electricity
Public Parks

Discuss Question

Answer: Option C. -> Electricity
Answer: (c)Electricity is not public good but it is club good including roads, bridges, gas, sewage, wires, telecom.

Question 14. A rapid increase in the rate of inflation is sometimes attributed to the ‘base effect’. What ‘base effect’?

It is the impact of the price levels of previous year on the calculation of inflation rate
None of the statements (A), (B) and (C) given above is correct in this content
It is the impact of drastic deficiency in supply due to failure of crops
It is the impact of the surge in demand due to rapid economic growth

Discuss Question

Answer: Option A. -> It is the impact of the price levels of previous year on the calculation of inflation rate
Answer: (a)

Question 15. Who recommends the MSP and issue prices?

Planning commission
Commission for Agricultural Costs and Prices
Ministry of agriculture
NABARD

Discuss Question

Answer: Option B. -> Commission for Agricultural Costs and Prices
Answer: (b)CACP was set up in 1985 and recommends for MSP, issue prices as well as procurement prices.

Question 16. Who amongst the following benefits most from inflation?

Saving Bank Account Holders
Government Pensioners
Creditors
Debtors

Discuss Question

Answer: Option D. -> Debtors
Answer: (d)

Question 17. Which of the following steps that will result in containing inflation?

Increasing Cash Reserve Ratio (CRR)

Decreasing Statutory Liquidity Ratio (SLR)

Permitting Central/State agencies to import duty free pulses and sugar.

Select the correct answer using the codes given below:

2 and 3 only
1 only
1 and 3 only
1, 2 and 3

Discuss Question

Answer: Option C. -> 1 and 3 only
Answer: (c)
In order to curb inflation if CRR is increased, then it may take liquidity from markets as banks will have to deposit more money with RBI.
Moreover, inflation may also be curbed by Permitting Central/State agencies to import duty-free pulses and sugar.
However, Decreasing SLR will leave more money to banks to give loans, which in turn will lead to inflation.

Question 18. Who has been recently made the chairman of the work group on revision of Wholesale Price Index Services?

K.C. Pant
Abhijit Sen
C. Rangrajan
P.R. Panchamukhi

Discuss Question

Answer: Option B. -> Abhijit Sen
Answer: (b)

Question 19. An increase in absolute and per capita real GNP do not connote a higher level of economic development, if

poverty and unemployment increase
imports grow faster than exports
industrial output fails to keep pace with agricultural output
agricultural output fails to keep pace with industrial output

Discuss Question

Answer: Option A. -> poverty and unemployment increase
Answer: (a)
An increase in absolute and per capita real GNP do not connote a higher level of economic development, if poverty and unemployment also increase, because this means the growth is not inclusive. The benefits of economic development are not reaped by many and growing inequality will rise.

Question 20. Consider the following statements.