Questions and answers for exam Preparation

MCQs

Total Questions : 89 | Page 8 of 9 pages

Question 71. Assertion (A):
The rate of inflation in India has come down in the last three years.
Reason (R):
The country has received a large amount of foreign capital during these years.
Select the correct answer from the codes given below.

(A) is true, but (R) is false
(A) is false, but (R) is true
Both (A) and (R) are true and (R) is the correct explanation of (A)
Both (A) and (R) are true, but (R) is not the correct explanation of (A)

Discuss Question

Answer: Option D. -> Both (A) and (R) are true, but (R) is not the correct explanation of (A)
Answer: (d)

Question 72. In India, inflation is measured by the :

consumers price Index for agricultural
wholesale price Index Number
consumers price Index for urban non-manual workers
National Income Deflation

Discuss Question

Answer: Option B. -> wholesale price Index Number
Answer: (b)In India, inflation is measured by the wholesale price Index . The wholesale prices of commodities of base year are compared with wholesale prices of current year to compute inflation.

Question 73. If the average total cost is declining then

total cost must be constant
the average fixed cost curve must be above the average variable cost curve
the marginal cost must be less than the average total cost
the marginal cost must be greater than the average total cost

Discuss Question

Answer: Option C. -> the marginal cost must be less than the average total cost
Answer: (c)When marginal cost is less than average cost, average cost must be falling. When marginal cost exceeds average cost must be rising. The marginal cost and average cost curves are related to each other.

Question 74. Many times we read a term “Free Market” in newspapers. What does it mean?

It is a market where pricing is driven by the laws of supply and demand.
In free market things are available without restraints of the government.
In such market, goods are free from extraneous influences such as buffer or quotas.

Codes :

only 3
only 1
only 2
Both 1 and 2

Discuss Question

Answer: Option D. -> Both 1 and 2
Answer: (d)

Question 75. When economic development takes place

Market imperfections increase
Specialisation increases
Commercialisation decreases
None of the above

Discuss Question

Answer: Option B. -> Specialisation increases
Answer: (b)
When economic development takes place, specialisation increases. Economic development typically involves improvements in a variety of indicators such as literacy rates, life expectancy and poverty rates.
GDP does not take into account other aspects such as leisure time, environmental quality, freedom, or social justice; alternative measures of economic well-being have been proposed.

Question 76. The term stagflation refers to a situation where

rate of growth is faster than the rate of price increase
growth has no relation with the change in price
rate of growth and prices both are decreasing
rate of growth is slower than the rate of price increase

Discuss Question

Answer: Option D. -> rate of growth is slower than the rate of price increase
Answer: (d)Stagflation occurs when the economy isn’t growing but prices are increasing, which is not a good situation for a country to be in. Stagflation - Persistant high inflation combined with high unemployment and stagnant demand in a country’s economy.

Question 77. In calculation of index of wholesale prices, which one of the following sector is assigned maximum weightage?

Fuel, power, light and lubricant
Manufactured products
Food articles
Non-food articles

Discuss Question

Answer: Option B. -> Manufactured products
Answer: (b)

Question 78. When the prices of commodities, goods and services start declining consistently, the phenomenon is known as

Negative growth
Discount field
Deflation
Market capitalism

Discuss Question

Answer: Option C. -> Deflation
Answer: (c)
When the prices of commodities, goods and services start declining consistently, the phenomenon is known as deflation.
Deflation is because of a fall in the aggregate level of demand. That is, there is a fall in how much the whole economy is willing to buy and the price for goods.
Negative Growth - It refers to a contraction in business sales or earnings. It is also used to refer to a contraction in a country’s economy as evidenced by a decrease in its GDP during any quarter of a given year.
Market Capitalism - An economic system that supports private enterprise within a free market, the means of production are privately owned.

Question 79. Brent index is associated with

copper future prices
gold future prices
crude oil prices
shipping rate index

Discuss Question

Answer: Option C. -> crude oil prices
Answer: (c)
Brent Crude is a major trading classification of sweet light crude oil that serves as a major benchmark price for purchases of oil worldwide. Brent Crude is extracted from the North Sea and comprises Brent Blend, Forties Blend, Oseberg and Ekofisk crudes.
The Brent Crude oil marker is also known as Brent Blend, London Brent and Brent petroleum.
The index represents the average price of trading in the 25 days Brent Blend, the Forties, Oseberg, Ekofisk (BFOE) market in the relevant delivery month as reported and confirmed by the industry media.

Question 80. Consider the following actions by the Government:

Cutting the tax rates.
Increasing the government spending.
Abolishing the subsidies.

In the context of economic recession, which of the above actions can be considered a part of the ‘fiscal stimulus’ package?

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

Discuss Question

Answer: Option D. -> 1 and 2 only
Answer: (d)Fiscal stimulus - Government measures, normally involving increased public spending and lower taxation are aimed at giving a positive jolt to economic activity.