Practice Quiz set 2 - indian economy mcq Online Quiz (set-1) For All Competitive Exams
Q-1) RESIDEX, an index of residential prices in India, was launched in the year
(a)
(b)
(c)
(d)
Q-2) Devaluation usually causes the internal price to
(a)
(b)
(c)
(d)
Devaluation is a deliberate downward adjustment to the value of a country’s currency, relative to another currency, group of currencies. Since it is relative to other currencies so the internal price remains unchanged.
It causes a country’s exports to become less expensive and imports more expensive.
Devaluation is a monetary policy tool used by countries that have a fixed exchange rate or semi-fixed exchange rate. It is often confused with Depreciation and is the opposite of revaluation.
Q-3) The base year for All-India Wholesale Price Index (WPI) has been changed by the Government of India from 2004-05 to
(a)
(b)
(c)
(d)
Q-4) Which of the following is included in M1?
(a)
(b)
(c)
(d)
M1 measures the most liquid components of the money supply, as it contains cash and assets that can quickly be converted to currency.
M0 + M1 - Narrow money - includes coins and notes in circulation and other money equivalents that are easily convertible into cash.
M2 - M1 + short term deposits in banks.
M3 - M2 + long term deposits and money market fund.
M4 - M3 + other deposits.
Q-5) With reference to India, consider the following statements
- WPI is available on a monthly basis only.
- As compare to Consumer Price Index for the Industrial Worker (CPIIW), the WPI gives less weightage to food articles.
Which of the statements given above is/are correct?
(a)
(b)
(c)
(d)
This rise in wholesale food prices was not captured by WPI as the weightage for food articles is just 14.3% compared to 65% for manufactured products in this index.
On the other hand, the weightage for food is 57% in CPI items which captures the impact of food prices better.
Further, wholesale prices do not take into account the substantial margins at the retail level, which tend to rise when there are shortages.
Q-6) Index ‘Residex’ is associated with
(a)
(b)
(c)
(d)
Q-7) Which of the following statements are correct?- When marginal revenue is positive, total revenue increases with increase in output.
- When marginal revenue is zero, total revenue is maximum.
- When marginal revenue becomes negative, total revenue falls with increase in output.
Select the correct answer using the code given below:
(a)
(b)
(c)
(d)
Q-8) Consider the following statements in regard to the Money market in India:
- It is a market for short-term funds with maturity ranging from overnight to one year.
- It acts as an instrument of liquidity adjustment for the Central Bank.
Which of the statements given above is/are correct?
(a)
(b)
(c)
(d)
The money market consists of financial institutions and dealers in money or credit who wish to either borrow or lend.
Participants borrow and lend for short periods of time, typically up to twelve months. Money market trades in short-term financial instruments commonly called “paper.”
Q-9) Which one among the following is the total amount of money available in an economy at a specific time ?
(a)
(b)
(c)
(d)
The money supply or money stock, is the total amount of monetary assets available in an economy at a specific time. It includes currency in circulation and demand deposits.
Near money: assess which can readily be converted into cash, such as bells of exchange.
Narrow money: Money in forms that can be used as a medium of exchange generally notes, coins and certain balances held by banks.
Q-10) The process of curing inflation by reducing money supply is called
(a)
(b)
(c)
(d)
The process of curing inflation by reducing the money supply is called disinflation.
Disinflation is a decrease in the rate of inflation – a slowdown in the rate of increase of the price level of goods and services in GDP. Cost pull inflation - It is caused by an increase in prices of inputs like Labour, raw material etc.
The increased price of the factors of production leads to the decreased supply of Goods. Demand-pull inflation - It is asserted to arise when Aggregate demand in an economy outpaces aggregate supply.
It involves inflation rising as real GDP rises and unemployment falls.