demand & supply, profit loss, inflation & price index section 1 MCQ Questions & Answers Detailed Explanation
MOST IMPORTANT indian economy mcq - 3 EXERCISES
The following question based on Demand & Supply, Profit Loss, Inflation & Price Index topic of indian economy mcq
(a) Need for that commodity
(b) Quantity demanded of that commodity
(c) Desire for that commodity
(d) Quantity demanded at certain price during any particular period of time
The correct answers to the above question in:
Answer: (d)
The demand for a commodity at a given price is the quantity that will be purchased at a unit of time and at a unit price.
Demand has the following features; Demand refers to the quantity at a given price, Demand must be defined per unit time.
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Question : 1
Which of the following can be the outcomes of very high inflation in the economy?
- Reduction in economic growth
- Increase in savings
- Reduction in exports
a) 2 and 3
b) 1 and 4 only
c) 3 and 4 only
d) 1 and 3 only
Answer »Answer: (d)
Inflation is a persistent increase in the general price level of goods and services in an economy over a period of time.
When the general price level rises, each unit of currency buys fewer goods and services.
Consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value.
High inflation means the excessive supply of money and thus leads to a rise in the cost of credit and interest rates.
Higher inflation leads to a reduction in economic growth, a decrease in the cost of credit, increase in spending rather than saving as the value of money is declining.
Question : 2
Which one of the following agencies of Indian Government implements the price support scheme (PSS)?
a) NAFED
b) Agriculture pricing agency of India
c) FCI
d) None of the above
Answer »Answer: (a)
In Order to help the farmers in getting remunerative prices for their produce with a view to encouraging higher investment and also to increase production and productivity of a commodity, the government declares Minimum Support Price (MSPs) for 25 notified agricultural commodities for each Kharif & Rabi crop season.
National Agricultural Cooperative Marketing Federation of India Ltd (NAFED) is one of the Central Nodal Agencies which implements PSS.
Question : 3
The most common measure of estimating inflation in India is
a) Consumer Price Index
b) Price Index of Index Goods
c) Price Index
d) Wholesale Price Index
Answer »Answer: (a)
Question : 4
Producer Price Index measures
a) the total change in the prices of produced goods and services
b) None of the above
c) the average change in the prices of produced goods and services
d) the marginal change in the prices of produced goods and services
Answer »Answer: (c)
Question : 5
With reference to India, consider the following statements.
- The Wholesale Price Index (WPI) in India is available on a monthly basis only.
- As compared on Consumers Price Index for Industrial Workers [CPI(IW)] the WPI gives less weight to food articles.
a) Both 1 and 2
b) Neither 1 nor 2
c) Only 1
d) Only 2
Answer »Answer: (a)
Question : 6
Which of the following would cause the aggregate demand curve to shift to the right?
a) an increase in real interest rates
b) an appreciation of the American dollar
c) an increase in purchases by the federal government
d) a decrease in the money supply
Answer »Answer: (c)
An increase in purchase by the federal Gov. causes the aggregate demand curve to shift to the right.
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