demand & supply, profit loss, inflation & price index section 3 MCQ Questions & Answers Detailed Explanation

Answer: (b)

When economic development takes place, specialisation increases. Economic development typically involves improvements in a variety of indicators such as literacy rates, life expectancy and poverty rates.

GDP does not take into account other aspects such as leisure time, environmental quality, freedom, or social justice; alternative measures of economic well-being have been proposed.

Answer: (d)

Stagflation occurs when the economy isn’t growing but prices are increasing, which is not a good situation for a country to be in. Stagflation - Persistant high inflation combined with high unemployment and stagnant demand in a country’s economy.

Answer: (c)

When the prices of commodities, goods and services start declining consistently, the phenomenon is known as deflation.

Deflation is because of a fall in the aggregate level of demand. That is, there is a fall in how much the whole economy is willing to buy and the price for goods.

Negative Growth - It refers to a contraction in business sales or earnings. It is also used to refer to a contraction in a country’s economy as evidenced by a decrease in its GDP during any quarter of a given year.

Market Capitalism - An economic system that supports private enterprise within a free market, the means of production are privately owned.

Answer: (c)

When marginal cost is less than average cost, average cost must be falling. When marginal cost exceeds average cost must be rising. The marginal cost and average cost curves are related to each other.

Answer: (b)

In India, inflation is measured by the wholesale price Index . The wholesale prices of commodities of base year are compared with wholesale prices of current year to compute inflation.

Answer: (d)