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

Question : 1

Which one of the following is not a method to control inflation?

a) Reducing the rate of interest

b) Rationing of commodities

c) Controlling the demand

d) Controlling the supply of money

Question : 2

Economic growth is usually coupled with

a) Stagflation

b) Hyper-inflation

c) Deflation

d) Inflation

Question : 3

Which of the following statements is/are true?

1. If increase in demand and supply are of equal magnitude, the price will remain unchanged, but the equilibrium quantity will increase.
2. If increase in demand is of greater magnitude than increase in supply, both equilibrium price and equilibrium quantity will increase.
3. If increase in supply is of greater magnitude than increase in demand, equilibrium price will fall but equilibrium quantity will increase.

a) 1 and 2 only

b) 2 and 3 only

c) 1 only I

d) 1, 2 and 3

Question : 4

Inflation is best described as

a) increase in purchasing power

b) increase in price of particular goods

c) high prices

d) increase in price index

Question : 5

In view of the fact that kerosene is an inferior good in India, what is/are its implication(s)?

1. As households get richer, they consume less kerosene.
2. Over time there is a decline in quality of kerosene.
3. 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

Question : 6

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)