Description : Inflation can be checked by - (1) increasing exports (2) increasing money supply (3) increasing Government expenditure (4) decreasing money supply
Last Answer : (4) decreasing money supply Explanation: The technical and most often used way to control inflation is by tightening the money supply. The logic goes that when people do not have excess money, ... . Most central banks use high interest rates as the traditional way to fight or prevent inflation.
Description : In general, deficit financing can create inflation, but it can be checked if. A) Government expenditure increases the aggregate supply in the aggregate demand ratio B) All the investment is indicated as payment on national debt only C) Only aggregate demand is increased D) All of the above
Last Answer : Answer: D
Description : The supply-side measure to control inflation is - (1) Reducing public expenditure (2) Price control through Public Distribution System (3) Higher taxation to mop up liquidity (4) Credit control
Last Answer : (2) Price control through Public Distribution System Explanation: The issue of inflation is addressed from both demand and supply sides. demand management is achieved by measures such as postponing public expenditure ... rice and wheat resorted to by FCI from its buffer stock in times of price rise.
Description : The supply-side measure to control inflation is (1) Reducing public expenditure (2) Price control through Public Distribution System (3) Higher taxation to mop up liquidity (4) Credit control
Last Answer : Price control through Public Distribution System
Description : The balance of payments equals (a) The difference between household spending over earnings (b) The difference between government expenditure over its income © A measure of the value of economic ... a country and rest of the world (d) The difference between inflation and unemployment.
Last Answer : © A measure of the value of economic transactions between residents of a country and rest of the world
Description : The traction on rear wheels can be increased by increasing a) Weight on rear wheels b) Weight on front wheels c) Decreasing inflation pressure d) Both a and c Ans. d
Last Answer : ans d
Description : The function of a government by which it seeks to seek a balance of employment, demand-supply, and inflation, is known as: a) Distribution function b) Allocation function c) Stabilization d) Protection
Last Answer : c) Stabilization
Description : Demand pull inflation may be caused by (a) An increase in cost (b) A decrease in interest rate © A reduction in government spending (d) An outward shift of aggregate supply.
Last Answer : (b) A decrease in interest rate
Description : The process of curing inflation by reducing money supply is called - (1) Cost-push inflation (2) Demand-pull inflation (3) Disinflation (4) Reflation
Last Answer : (3) Disinflation Explanation: Disinflation is a decrease in the rate of inflation -a slowdown in the rate of increase of the general price level of goods and services in a nation's gross ... a very short period of time. Disinflation takes place only when an economy is suffering from recession.
Description : Which of the following can be used for checking inflation temporarily? (1) Increase in wages (2) Decrease in money supply (3) Decrease in taxes (4) None of these
Last Answer : (2) Decrease in money supply Explanation: An open market operation (also known as OMO) is an activity by a central bank to buy or sell government bonds on the open market. India ... those in the other developed countries. Economists claim that an increase in money supply alone constitutes inflation.
Description : In a period of inflation and price rises the supply of money remains - (1) the same (2) increases (3) decreases (4) increases or decreases pro-portionately.
Last Answer : (2) increases Explanation: Money supply is the total amount of monetary assets available in an economy at a specific time. The relation between money and prices is historically associated with the quantity ... money-supply growth, at least for rapid increases in the amount of money in the economy.
Description : Inflation is caused by - (1) increase in money supply and decrease in production (2) increase in money supply (3) increase in production (4) decrease in production
Last Answer : (1) increase in money supply and decrease in production Explanation: Economists generally agree that in the long run, inflation is caused by increases in the money supply. According to the theory of ... few goods. The increase in money supply is not matched by the equivalent production of goods.
Description : Inflation is caused by (1) increase in money supply and decrease in production (2) increase in money supply (3) increase in production (4) decrease in production
Last Answer : increase in money supply and decrease in production
Description : In a period of inflation and price rise the supply of money remains (1) the same (2) increases (3) decreases (4) increases or decreases proportionately.
Last Answer : increases
Description : The process of curing inflation by reducing money supply is called (1) Cost-push inflation (2) Demand-pull inflation (3) Disinflation (4) Reflation
Last Answer : Disinflation
Description : Which of the following can be used for checking inflation temporarily ? (1) Increase in wages (2) Decrease in money supply (3) Decrease in taxes (4) None of these
Last Answer : Decrease in money supply
Description : Wagner’s hypothesis is associated with (a) Public receipts (b) Public expenditure (c) Supply of money (d) Public debt
Last Answer : (b) Public expenditure
Description : State which of the following is correct? The Consumer Price Index reflects - (1) the standard of living (2) the extent of inflation in the prices of consumer goods (3) the increasing per capita income (4) the growth of the economy
Last Answer : (2) the extent of inflation in the prices of consumer goods Explanation: A consumer price index (CPI) measures changes in the price level of consumer goods and services purchased by households ... , pensions, for regulating prices and for deflating monetary magnitudes to show changes in real values.
Description : Countries that depend mainly on the export of primary products for their income, are prone to - (1) inflation (2) economic instability (3) increasing unemployment (4) stable economic growth
Last Answer : (3) increasing unemployment Explanation: Most of the world's poorest countries depend for increasing export earnings on agricultural products that are vulnerable to fluctuating or declining terms of ... primary products were hit particularly hard by falling commodity prices between 1980 and 1984.
Description : Countries that depend mainly on the export of primary products for their income, are prone to (1) inflation (2) economic instability (3) increasing unemployment (4) stable economic growth
Last Answer : increasing unemployment
Description : State which of the following is correct ? The Consumer Price Index reflects : (1) the standard of living (2) the extent of inflation in the prices of consumer goods (3) the increasing per capita income (4) the growth of the economy
Last Answer : the extent of inflation in the prices of consumer goods
Description : A shift outward in supply curve will result in equilibrium price (a) increasing and quantity increasing ; (b) increasing and quantity decreasing ; (c) decreasing and quantity increasing ; (d) decreasing and quantity decreasing
Last Answer : (c) decreasing and quantity increasing ;
Description : If people's income of a country is denoted in a curved line space that it has increased, then what does it denote? (1) the income is increasing (2) the income is decreasing (3) dissimilarity is decreasing in income distribution (4) dissimilarity in income distribution is increasing
Last Answer : (3) dissimilarity is decreasing in income distribution Explanation: It shows inequality in income distribution. Inequality indices can also be derived directly from the Lorenz curve. Perhaps the most commonly- ... by the Lorenz curve and the perfect equality line to the total area below that line.
Description : When marginal utility is zero, the total utility is - (1) Minimum (2) Increasing (3) Maximum (4) Decreasing
Last Answer : (3) Maximum Explanation: Marginal utility measures the extra utility (or satisfaction) from consuming an additional unit of a product. Total utility is the total satisfaction from the consumption of the ... in total satisfaction from the consumption of that unit. So the total unit is at maximum.
Description : Over the years the contribution of agriculture to Indian GDP is a. Increasing b. Decreasing c. Constant d. None of these
Last Answer : b. Decreasing
Description : Penetration of disc plough can be improved by a. Increasing disc angle b. Decreasing tilt angle c. Both a & b d. None of these
Last Answer : b. Decreasing tilt angle
Description : If the production possibility curve is linear, then production is said to be subject of (a) constant opportunity cost (b) decreasing opportunity cost © Increasing opportunity cost (d) first increasing then decreasing opportunity cost.
Last Answer : (a) constant opportunity cost
Description : If people’s income of a country is denoted in a curved line space that it has increased, then what does it denote? (1) the income is increasing (2) the income is decreasing (3) dissimilarity is decreasing in income distribution (4) dissimilarity in income distribution is increasing
Last Answer : dissimilarity is decreasing in income distribution
Description : When marginal utility is zero, the total utility is (1) Minimum (2) Increasing (3) Maximum (4) Decreasing
Last Answer : Maximum
Description : Inflation occurs when aggregate supply is - (1) more than aggregate demand (2) less than aggregate demand (3) equal to aggregate demand (4) None of these
Last Answer : (2) less than aggregate demand Explanation: If the supply is less than the demand, the price will increase. Inflation, the persistent increase in the average price level, can be ... Translating this to the macro-economy suggests that inflation occurs when aggregate demand exceeds aggregate supply.
Description : Which curve shows the inverse relationship between unemployment and inflation rates? (1) Supply curve (2) Indifference curve (3) IS curve (4) Phillips curve
Last Answer : (4) Phillips curve Explanation: The Phillips curve shows the inverse relationship between inflation and unemployment: as unemployment decreases, inflation increases. The relationship, however, is not linear. Graphically, ... unemployment rate is on the x-axis and the inflation rate is on the y-axis.
Description : An increase in aggregate demand is more likely to lead to demand pull inflation (a) If aggregate supply is completely elastic (b) If aggregate supply is completely inelastic © If aggregate supply is unitary elastic (d) If aggregate supply is moderately elastic
Last Answer : (b) If aggregate supply is completely inelastic
Description : Inflation occurs when aggregate supply is (1) more than aggregate demand (2) less than aggregate demand (3) equal to aggregate demand (4) None of these
Last Answer : less than aggregate demand
Description : Which curve shows the inverse relationship between unemployment and inflation rates ? (1) Supply curve (2) Indifference curve (3) IS curve (4) Phillips curve
Last Answer : Phillips curve
Description : Under adjustable pegged exchange rates, if the rate of inflation in the United States exceeds the rate of inflation of its trading partners: A. U.S. exports tend to rise and imports tend to fall ... C. U.S. foreign exchange reserves tend to rise D. U.S. foreign exchange reserves remain constant
Last Answer : B. U.S. imports tend to rise and exports tend to fall
Description : The functional relationship between income and consumption expenditure is explained by - (1) Consumer' Surplus (2) Law of Demand (3) Law of Supply (4) Keynes's psychological law of consumption
Last Answer : (4) Keynes's psychological law of consumption Explanation: Keynes defined Psychological Law of Consumption in terms of, "The fundamental psychological law, upon which we are entitled to depend with great ... consumption as their income increases but not by as much as the increase in the income."
Description : Effective demand depends on - (1) capital-output ratio (2) output-capital ratio (3) total expenditure (4) supply price
Last Answer : (4) supply price Explanation: Effective Demand is "the demand in which the consumer are able and willing to purchase at conceivable price" simply saying if the product price is low more ... Function or Price and Aggregate Supply Function or Price to explain the determination of effective demand.
Description : Effective demand depends on (1) capital-output ratio (2) output-capital ratio (3) total expenditure (4) supply price
Last Answer : supply price
Description : The functional relationship between income and consumption expenditure is explained by (1) Consumer’ Surplus (2) Law of Demand (3) Law of Supply (4) Keynes’s psychological law of consumption
Last Answer : Keynes’s psychological law of consumption
Description : Crowding out means that a. a government budget deficit lowers interest rates and causes investment spending to rise b. an increase in marginal tax rates lowers production c. a government ... spending to fall d. a government budget deficit raises American exports and lowers American imports
Last Answer : c. a government budget deficit raises interest rates and causes investment spending to fall
Description : 10. Crowding out means that a. a government budget deficit lowers interest rates and causes investment spending to rise b. an increase in marginal tax rates lowers production c. a ... investment spending to fall d. a government budget deficit raises American exports and lowers American imports
Description : Which of the following is not a component of GDP? (a) Government spending (b) Investment © Interest (d) Net exports
Last Answer : © Interest
Description : By increasing the 'Bank Rate', the RBI can: a) provide incentives to commercial banks to lend more to public b) provide incentives to commercial banks to lend less to public c) increase the money supply in the market d) none of the above
Last Answer : b) provide incentives to commercial banks to lend less to public Bank rate is the rate at which commercial banks can borrow money from the RBI. If the rate is higher, then taking money from RBI becomes difficult, so the banks will lend less to public. And vice-versa.
Description : Which of these is one of the causes of inflation? (a) Increase in public expenditure ; (b) Deficit financing ; (c) Increase in administrative prices (d) All the three
Last Answer : (d) All the three
Description : 6. Assume that Potential Real GDP equals $10,000. National Income is therefore $10,000. Of this, consumers will pay $2,000 in taxes, save $1,000, and spend $7,000 on consumer goods. Business Investment ... . budget deficit of $1000 c. budget surplus of $1000 d. budget deficit of $2000 C C A A C
Last Answer : c. budget surplus of $1000
Description : The sale proceeds of Government Bonds come under the budget head of - (1) Revenue Receipts (2) Current Expenditure (3) Capital Outlay (4) Capital Receipts
Last Answer : (4) Capital Receipts Explanation: Capital receipts are the funds received into the businesses that are not part of the operating activities of the establishment. Capital receipts primarily include external ... furniture, investment (long term) etc., which shall not be occurring all the time.
Description : Which of the following is not included in the National Income? (1) Imputed rent of owner-occupied houses (2) Government expenditure on making new bridges (3) Winning a lottery (4) Commission paid to an agent for sale of house
Last Answer : (3) Winning a lottery Explanation: National income is the total value a country's final output of all new goods and services produced in one year. Transfer payments are not a ... pensions, charity, scholarships etc. Privatesector transfers include charitable donations and prizes to lottery winners.
Description : Investment and savings are kept equal through a change in the level of - (1) Consumption (2) Investment (3) Government expenditure (4) Income
Last Answer : (1) Consumption Explanation: Desired savings are kept equal to desired investment by responses to interest rate changes. Savings identity or the savings investment identity is a concept in ... brings savings and investment into balance without any intention by business to increase investment.
Description : Multiplier process in economic theory is conventionally taken to mean: (1) the manner in which prices increase (2) the manner in which banks create credit (3) income of an economy grows on account of an initial investment (4) the manner in which government expenditure increases
Last Answer : (3) income of an economy grows on account of an initial investment Explanation: In economics, a multiplier is a factor of proportionality that measures how much an endogenous variable changes in response to a change in ... of the U.S. money supply, and MO as a measure of the U.S. monetary base.
Description : Which of the following does not cause a shift in aggregate demand ? (a) Consumption (b) Government expenditure (c) Investment (d) Prices
Last Answer : (d) Prices