demand & supply, profit loss, inflation & price index section 3 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) Increasing returns
(b) Returns to scale
(c) Diminishing returns
(d) Constant returns
The correct answers to the above question in:
Answer: (b)
The way total output changes due to change in all inputs in the same proportion is known as “law of return to scale”.
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Question : 1
Economic growth is usually coupled with
a) Hyper inflation
b) Deflation
c) Inflation
d) Stagflation
Answer »Answer: (c)
With the increase in GDP, aggregate demand increases, because more production means people have more disposable income, which means more consumer spending.
As a result, prices rise in response, and in conclusion, because aggregate demand grows faster than long-term aggregate supply, economic growth will be coupled with inflation.
Hyperinflation - In economics, hyperinflation occurs when a country experiences very high and usually actuarially rates of inflation. Economic growth is usually coupled with inflation.
Question : 2
A market in which there are large numbers of sellers of a particular product, but each seller sells somewhat differentiated but close products is termed as
a) Monopolistic competition
b) Perfect competition
c) Monopoly
d) Oligopoly
Answer »Answer: (a)
Monopolistic competition is a form of market in which there are large numbers of sellers of a particular products but each seller sells somewhat differentiated but close products.
Question : 3
Which one of the following causes the condition in which prices increase rapidly as a currency loses its value ?
a) Stealth inflation
b) Stagflation
c) Conflation
d) Hyper inflation
Answer »Answer: (d)
Hyperinflation occurs when a country experiences very high and usually accelerating rates of monetary and price inflation, causing the population to minimize their holdings of money.
Under such conditions, the general price level within an economy increases rapidly as the official currency quickly loses real value.
Stagflation: Persistent high inflation combined with high unemployment.
Conflation: The merging of two or more sets of information texts, ideas etc into one.
Stealth inflation: It is a type of charge or fee created by the business to gain extra profit and revenue from its customers.
Question : 4
Consider the following statements and state which is/are correct?
- The sub-prime crisis which hit the U.S. economy was caused by sudden increase in oil prices.
- The crisis led to default in home loan repayment.
- It led to failure of some U.S. Banks.
- Sub-prime crisis caused crash in Indian stock market.
a) Only 2, 3 and 4
b) 1, 2, 3 and 4
c) Only 1
d) Only 2 and 4
Answer »Answer: (a)
Question : 5
The average fixed cost curve will always be
a) a downward sloping convex to the origin curve
b) a downward sloping straight line
c) a rectangular hyperbola
d) a U-shaped curve
Answer »Answer: (c)
Total fixed costs are constant, so the average fixed cost curve diminishes with the output. Thus, the average fixed cost curve is a rectangular hyperbola.
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