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) copper future prices
(b) gold future prices
(c) crude oil prices
(d) shipping rate index
The correct answers to the above question in:
Answer: (c)
Brent Crude is a major trading classification of sweet light crude oil that serves as a major benchmark price for purchases of oil worldwide. Brent Crude is extracted from the North Sea and comprises Brent Blend, Forties Blend, Oseberg and Ekofisk crudes.
The Brent Crude oil marker is also known as Brent Blend, London Brent and Brent petroleum.
The index represents the average price of trading in the 25 days Brent Blend, the Forties, Oseberg, Ekofisk (BFOE) market in the relevant delivery month as reported and confirmed by the industry media.
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Question : 1
Consider the following actions by the Government:
- Cutting the tax rates.
- Increasing the government spending.
- Abolishing the subsidies.
a) 2 only
b) 1 and 3 only
c) 1, 2 and 3
d) 1 and 2 only
Answer »Answer: (d)
Fiscal stimulus - Government measures, normally involving increased public spending and lower taxation are aimed at giving a positive jolt to economic activity.
Question : 2
Inflation in India is measured on which of the following indexes / indicators?
a) Gross Domestic Product (GDP)
b) Cost of Living Index (CLI)
c) Consumer Price Index (CPI)
d) Wholesale Price Index (WPI)
Answer »Answer: (d)
Inflation in India is measured on the Wholesale Price Index (WPI). The wholesale price index (WPI) is based on the wholesale price of a few relevant commodities or over commodities available.
Cost of Living Index - It is a theoretical price index that measures the relative cost of living over time or regions.
Consumer Price Index - It is a measure that examines the weighted average of prices of a basket of consumer goods & services such as transportation food and medical care.
Question : 3
In view of the fact that kerosene is an inferior good in India, what is/are its implication(s)?
- As households get richer, they consume less kerosene.
- Over time there is a decline in quality of kerosene.
- Government needs to stop subsidies on kerosene.
a) 1 and 2 only
b) 2 and 3 only
c) 1 only
d) 1, 2 and 3
Answer »Answer: (c)
Generally Kerosene is used as fuel by the poor, as they get prosperity, they use little of this fuel.
Question : 4
In calculation of index of wholesale prices, which one of the following sector is assigned maximum weightage?
a) Fuel, power, light and lubricant
b) Manufactured products
c) Food articles
d) Non-food articles
Answer »Answer: (b)
Question : 5
When the prices of commodities, goods and services start declining consistently, the phenomenon is known as
a) Negative growth
b) Discount field
c) Deflation
d) Market capitalism
Answer »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.
Question : 6
The term stagflation refers to a situation where
a) rate of growth is faster than the rate of price increase
b) growth has no relation with the change in price
c) rate of growth and prices both are decreasing
d) rate of growth is slower than the rate of price increase
Answer »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.
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