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
(a) A commodity whose benefits are indivisibly spread among the entire community
(b) A Government scheme that benefits the poor households
(c) A commodity produced by the Government
(d) Any commodity that is very popular among general public
The correct answers to the above question in:
Answer: (a)
Public good means a commodity or service which is given without profit to everyone in a society by government or any organisation.
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Read more demand supply profit loss inflation price index Based Indian Economy Questions and Answers
Question : 1
Which one among the following is a fixed cost to a manufacturing firm in the short run?
a) Overtime payment to worker
b) Cost of energy
c) Insurance on buildings
d) Cost of raw materials
Answer »Answer: (c)
In the short run insurance premium are fixed costs because they are independent of the level of production.
Question : 2
In an economy a condition of lack of money supply in comparison to the supply of the goods services, will lead to:
a) Hyperinflation
b) Inflation
c) Deflation
d) Devaluation
Answer »Answer: (c)
Deflation may be caused by a combination of the supply and demand for goods and the supply and demand for money, specifically the supply of money going down and the supply of goods going up.
Question : 3
Disinvestment is :
a) Increase in investment.
b) Offloading of shares of private companies to government.
c) Off-loading of government shares to private companies.
d) Closing down of business concerns.
Answer »Answer: (c)
Disinvestment is a process in which off-loading of government shares is done to private companies.
A company or government organization will divest an asset or subsidiary as a strategic move for the company, planning to put the proceeds from the divestiture to better use that garners a higher return on investment.
Question : 4
In India, inflation is measured by the
a) Producer Price Index
b) National Income deflation
c) Wholesale Price Index number
d) Consumers Price Index
Answer »Answer: (d)
Question : 5
Consider the following statements :
- Inflation benefits the debtors.
- Inflation benefits the bond-holders.
a) Both 1 and 2
b) 2 only
c) 1 only
d) Neither 1 nor 2
Answer »Answer: (c)
Inflation redistributes wealth from creditors to debtors i.e., lenders suffer and borrowers benefit out of inflation.
Bondholders = this person has lent money (to debtors) and received bonds in return.
So he is a lender, he suffers, by the way, they haven’t specifically used the word – “inflation-indexed bonds”, hence we cannot say inflation benefits the bond-holders.
Question : 6
Which of the following statements (s) are true with respect to the concept of “efficiency” as used in mainstream economics?
- Efficiency occurs when no possible re-organisation of production can make anyone better off without making someone else worse off
- An economy is clearly inefficient if it is inside the Production Possibility Frontier (PPF)
- At a minimum, an efficient economy is on its Production Possibility Frontier (PPF)
- The terms such as ‘ Pareto Efficiency’, ‘Pareto Optimality’ and ‘Allocative Efficiency’ are all essentially one and same which denote ‘efficiency in resource allocation’
a) 2 and 3 only
b) 1 and 4 only
c) 1 and 3 only
d) 1, 2, 3 and 4
Answer »Answer: (b)
When the re-organisation of production is not possible which can make anyone better off without making someone else worse off then efficiency occurs.
Pareto Efficiency, Pareto Optimality and Allocative Efficiency are all the same and indicates “efficiency in resource allocation”.
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