Index of Industrial Production (IIP) primarily measures –
(A) Agricultural output
(B) Industrial performance
(C) Employment rate
(D) Wholesale prices
Answer: (B)

Austerity measures refer to –
(A) Expansionary fiscal policy
(B) Cuts in government spending and/or increases in taxes
(C) Loose monetary policy
(D) Investment in infrastructure
Answer: (B)

Pigovian subsidy is provided to –
(A) Encourage negative externalities
(B) Discourage production
(C) Promote activities with positive externalities
(D) Reduce foreign investment
Answer: (C)

The balance of invisibles includes –
(A) Oil imports
(B) Machinery exports
(C) Services, remittances, income
(D) Gold imports
Answer: (C)

In national income accounting, net exports equal –
(A) Imports – exports
(B) Exports – imports
(C) GDP – GNP
(D) Revenue – expenditure
Answer: (B)

Commodity money has intrinsic value because –
(A) It’s fiat money
(B) It is legal tender
(C) It can be used as a commodity
(D) It is digital
Answer: (C)

Voluntary unemployment refers to –
(A) Unemployment due to recession
(B) Workers refusing jobs at prevailing wage
(C) Job loss due to inflation
(D) Structural unemployment
Answer: (B)

Full capital account convertibility allows –
(A) Free trade in goods
(B) Free movement of capital in and out of a country
(C) Tax-free income
(D) Fixed exchange rate
Answer: (B)

The difference between potential GDP and actual GDP is known as –
(A) Output deficit
(B) Output gap
(C) Fiscal gap
(D) Revenue deficit
Answer: (B)

Wagner’s Law suggests that –
(A) Private investment crowds out public investment
(B) Public expenditure increases as GDP grows
(C) Inflation rises with wages
(D) Government size remains constant
Answer: (B)

Seigniorage is the –
(A) Tax revenue from exports
(B) Profit from issuing currency
(C) Foreign direct investment
(D) Interest on sovereign bonds
Answer: (B)

A normal profit occurs when –
(A) Total cost exceeds total revenue
(B) Total revenue equals total cost
(C) Marginal cost is zero
(D) There’s zero taxation
Answer: (B)

Cost-push inflation is caused by –
(A) Increased demand
(B) Supply shock like rising wages or raw material costs
(C) Foreign exchange surplus
(D) Government subsidies
Answer: (B)

Transaction cost economics was introduced by –
(A) Keynes
(B) Adam Smith
(C) Ronald Coase
(D) Ricardo
Answer: (C)

A depreciated currency makes –
(A) Imports cheaper
(B) Exports more expensive
(C) Exports more competitive
(D) Inflation fall
Answer: (C)

In a bilateral monopoly, there is –
(A) One buyer, many sellers
(B) One seller, many buyers
(C) One buyer and one seller
(D) Many buyers and sellers
Answer: (C)

Monetary base (high-powered money) includes –
(A) M3
(B) M2
(C) Currency with public + banks’ deposits with RBI
(D) Demand deposits
Answer: (C)

The concept of utility in economics refers to –
(A) Revenue from goods
(B) Usefulness of goods
(C) Satisfaction derived from consumption
(D) Number of units sold
Answer: (C)

A revenue deficit indicates –
(A) Capital expenditure exceeds capital receipts
(B) Total expenditure exceeds total receipts
(C) Revenue expenditure exceeds revenue receipts
(D) Borrowings exceed taxes
Answer: (C)

Disguised unemployment implies –
(A) Workers are visibly idle
(B) Marginal productivity of some workers is zero
(C) Seasonal jobs
(D) High wage pressure
Answer: (B)

A horizontal demand curve means –
(A) Perfectly elastic demand
(B) Perfectly inelastic demand
(C) Unit elastic demand
(D) Backward bending demand
Answer: (A)

The dual pricing system refers to –
(A) Price ceiling and price floor
(B) Same good sold at different prices in different markets
(C) Monopoly pricing
(D) Import tariffs
Answer: (B)

Ad valorem tax is levied –
(A) At a fixed amount per unit
(B) As a percentage of value
(C) On imports only
(D) Per transaction
Answer: (B)

The Marginal Rate of Technical Substitution (MRTS) is –
(A) Rate at which output increases with labor
(B) Rate at which one input substitutes another, holding output constant
(C) Average productivity
(D) Ratio of cost to profit
Answer: (B)

Inclusive Wealth Index (IWI) includes –
(A) GDP and inflation
(B) Natural, human, and produced capital
(C) Market prices only
(D) Imports and exports
Answer: (B)

Lump-sum tax has –
(A) No impact on aggregate demand
(B) Constant average rate
(C) No marginal tax rate
(D) Zero impact on income
Answer: (C)

Zero-based budgeting (ZBB) starts from –
(A) Previous year’s data
(B) A fixed baseline
(C) Zero, justifying each item
(D) Revenue targets
Answer: (C)

A Giffen good must be –
(A) Inferior with strong income effect
(B) Luxury good
(C) Substitutable
(D) Price inelastic
Answer: (A)

Twin deficit hypothesis links –
(A) Revenue deficit and trade surplus
(B) Fiscal and current account deficits
(C) Inflation and unemployment
(D) Fiscal deficit and black money
Answer: (B)

The precautionary motive for holding money relates to –
(A) Future price expectations
(B) Unforeseen emergencies
(C) Daily transactions
(D) Speculative buying
Answer: (B)

A natural rate of unemployment includes –
(A) Cyclical unemployment
(B) Structural and frictional unemployment
(C) Only disguised unemployment
(D) No unemployment
Answer: (B)

The Harrod-neutral technical progress is also known as –
(A) Labor-augmenting
(B) Capital-augmenting
(C) Neutral productivity
(D) Hicks-neutral
Answer: (A)

Base effect in inflation analysis refers to –
(A) Fluctuation due to previous year’s high or low base
(B) Market failure
(C) Constant prices
(D) Index recalculation
Answer: (A)

Non-performing assets (NPAs) are loans –
(A) That are repaid early
(B) On which interest or principal is overdue for 90+ days
(C) Which are interest-free
(D) Given to large borrowers only
Answer: (B)

The expenditure method of calculating GDP includes –
(A) C + I + G + (X – M)
(B) W + R + I + P
(C) NI – depreciation
(D) C + S
Answer: (A)

Repo rate is the rate at which –
(A) RBI lends to banks
(B) Banks lend to RBI
(C) Banks lend to public
(D) RBI lends to government
Answer: (A)

A current account surplus indicates –
(A) Exports < imports
(B) Exports > imports
(C) Budget deficit
(D) Capital account deficit
Answer: (B)

Time preference in economics means –
(A) Preference for higher income
(B) Present consumption is preferred over future
(C) Zero interest rate
(D) Inflation bias
Answer: (B)

Satisficing behavior was introduced by –
(A) Adam Smith
(B) Herbert Simon
(C) Milton Friedman
(D) Hicks
Answer: (B)

The production possibility curve (PPC) shifts outward due to –
(A) Unemployment
(B) Inflation
(C) Technological advancement
(D) Price ceiling
Answer: (C)

A contractionary fiscal policy is implemented by –
(A) Increasing spending
(B) Reducing taxes
(C) Cutting government expenditure
(D) Printing money
Answer: (C)

Human Development Index (HDI) was introduced by –
(A) Amartya Sen and Mahbub ul Haq
(B) Adam Smith
(C) Paul Krugman
(D) John Hicks
Answer: (A)

In monopolistic competition, firms have –
(A) Perfect substitutes
(B) Identical products
(C) Product differentiation
(D) Price takers only
Answer: (C)

The invisible hand metaphor was introduced by –
(A) Ricardo
(B) Keynes
(C) Adam Smith
(D) Marshall
Answer: (C)

The first country to adopt inflation targeting was –
(A) UK
(B) Canada
(C) New Zealand
(D) India
Answer: (C)

Subsidies are included in –
(A) GDP at market prices
(B) GDP at factor cost
(C) Net indirect taxes
(D) Transfer payments
Answer: (B)

Global value chains (GVCs) refer to –
(A) Domestic production
(B) Government contracts
(C) International production sharing
(D) Currency manipulation
Answer: (C)

Speculative motive of money demand depends on –
(A) Income
(B) Wage
(C) Interest rates
(D) Consumption
Answer: (C)

Hysteresis in unemployment means –
(A) It’s purely cyclical
(B) Short-term unemployment
(C) Temporary unemployment becomes permanent
(D) Caused by fiscal deficit
Answer: (C)

Green bonds are issued to –
(A) Fund military
(B) Fund eco-friendly projects
(C) Encourage FDI
(D) Finance agriculture subsidies
Answer: (B)