demand & supply, profit loss, inflation & price index section 2 MCQ Questions & Answers Detailed Explanation

Question : 1

Which of the following is not seen as an advantage of the gold standard?

a) No country needs to serve at the centre of this fixed exchange rate system.

b) For a given stock of gold, a rise in real money supply can only occur if the price level declines.

c) Inflation is unlikely to emerge as a significant problem.

d) The monetary mechanism has credibility.

Question : 2

Rise in the price of a commodity means

a) fall in the value of currency only

b) rise in the value of commodity only

c) rise in the value of currency only

d) fall in the value of currency and rise in the value of commodity

Question : 3

A rapid increase in the rate of inflation is sometimes attributed to the base effect. What is base effect?

a) It is the impact of the price levels of previous year on the calculation of inflation rate.

b) It is the impact of drastic deficiency in supply due to failure of crops.

c) It is the impact of the surge in demand due to rapid economic growth.

d) None of the statements given above is correct.

Question : 4

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.

Question : 5

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

Question : 6

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