demand & supply, profit loss, inflation & price index section 2 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
Investment has a demand effect.
Reason (R):
Investment augments the productivity and income in the economy.
Codes:
(a) (A) is correct, but (R) is incorrect.
(b) Both (A) and (R) are correct, and (R) is the correct explanation of (A).
(c) Both (A) and (R) are correct, but (R) is not the correct explanation of (A).
(d) (A) is incorrect, but (R) is correct.
The correct answers to the above question in:
Answer: (b)
Investment in capital and labour will increase productivity and production which will cause either rise in wages or the creation of employment or both thus the overall income will rise.
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Question : 1
The supply-side economics lays greater emphasis on the point of view of :
a) global economy
b) consumer
c) producer
d) middle-man
Answer »Answer: (c)
Supply-side economics lays greater emphasis on the point of view of the producer whereas the demand side economics lays emphasis on the interest of the consumer.
Question : 2
In the paralance of economy / commerce, what is ‘Gilt-edged market’?
a) Market of safe securities
b) Gold and Silver market
c) Industrial securities market
d) Market of software technology products
Answer »Answer: (a)
In the parlance of economy, Gilt-edged market is called market of safe securities. “Gilt-edged” denotes high-grade securities, consequently carrying low yields.
Question : 3
The base year for All-India Wholesale Price Index (WPI) has been changed by the Government of India from 2004-05 to
a) 2012-13
b) 2013-14
c) 2010-11
d) 2011-12
Answer »Answer: (d)
Question : 4
Inflation rate based on consumer price index increases if
a) Statutory Liquidity ration is increased
b) Repo rate is increased
c) Bank rate is decreased
d) Reverse repo rate is decreased
Answer »Answer: (c)
Question : 5
During period of inflation, rates should
a) Remain constant
b) Increase
c) Decrease
d) Fluctuate
Answer »Answer: (b)
During inflation interest rates should increase so that the investor invests more in lieu of higher interest-earning thus money supply reduces which can reduce inflation.
Similarly higher interest rates mean credit becomes costly so that again supply of money reduces which helps in curbing inflation.
Question : 6
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.
a) Only 2
b) Both 1 and 2
c) Only 1
d) Neither 1 nor 2
Answer »Answer: (a)
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.
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