The Real Effective Exchange Rate (REER) is – (A) Nominal exchange rate (B) Trade-weighted exchange rate adjusted for inflation (C) Exchange rate fixed by RBI (D) Spot market exchange rate Answer: (B)
The Revenue Neutral Rate (RNR) in GST context means – (A) Rate at which revenue remains constant after GST (B) Rate that yields no revenue (C) Rate without tax burden (D) Fixed subsidy rate Answer: (A)
Hick’s compensation principle is used to – (A) Assess government budgets (B) Compare welfare between two situations (C) Determine subsidies (D) Measure inflation Answer: (B)
Capital adequacy ratio (CAR) is the ratio of – (A) Deposits to loans (B) Bank’s capital to its risk-weighted assets (C) Profit to expenditure (D) Capital to cash reserves Answer: (B)
The CRISIL index is associated with – (A) Stock markets (B) Credit ratings (C) Government spending (D) Agricultural prices Answer: (B)
A liquidity trap occurs when – (A) Inflation is high (B) Interest rate is low and demand for money is perfectly elastic (C) Money supply is restricted (D) Budget is in surplus Answer: (B)
Effective demand in Keynesian theory is determined by – (A) AS and AD intersection (B) Investment only (C) Wage levels (D) Full employment Answer: (A)
Philips Curve in the long run is – (A) Downward sloping (B) Vertical (C) Horizontal (D) U-shaped Answer: (B)
Dual economy refers to coexistence of – (A) Capitalism and socialism (B) Agriculture and industry (C) Traditional and modern sectors (D) Private and public sectors Answer: (C)
Incremental Capital Output Ratio (ICOR) measures – (A) Return on investment (B) Output generated per unit of additional capital (C) Total production (D) Labor efficiency Answer: (B)
The Golden Rule of accumulation in growth theory refers to – (A) Optimal savings rate for maximum consumption (B) Equal income distribution (C) Balanced trade (D) Government spending equals revenue Answer: (A)
Base money does not include – (A) Currency with public (B) Bank deposits with RBI (C) Treasury bills (D) Vault cash Answer: (C)
Moral suasion is a – (A) Quantitative tool (B) Fiscal measure (C) Qualitative tool of monetary policy (D) Legal enforcement Answer: (C)
Public expenditure multiplier will be higher if – (A) MPC is high (B) MPC is low (C) Tax rate is high (D) Government savings rise Answer: (A)
A deadweight loss from taxation occurs due to – (A) Black money (B) Market distortion and efficiency loss (C) Inflation (D) Transfer payments Answer: (B)
The supply of land in the short run is – (A) Perfectly elastic (B) Inelastic (C) Unit elastic (D) Negative Answer: (B)
Tax incidence depends on – (A) Legal liability (B) Price elasticity of demand and supply (C) Government policy (D) Revenue deficit Answer: (B)
GDP at factor cost excludes – (A) Depreciation (B) Indirect taxes (C) Subsidies (D) Gross profit Answer: (B)
Tragedy of the commons occurs because – (A) Overexploitation of non-excludable resources (B) Underuse of technology (C) High taxes (D) Budget surplus Answer: (A)
Hot money refers to – (A) Long-term FDI (B) Speculative capital flows (C) Government borrowing (D) Agricultural subsidies Answer: (B)
Adaptive expectations theory assumes – (A) Perfect foresight (B) Current expectations based on past data (C) Rational behavior (D) Policy consistency Answer: (B)
Structural adjustment programs (SAPs) are linked with – (A) WTO (B) UNDP (C) IMF and World Bank loans (D) NITI Aayog Answer: (C)
Primary deficit is calculated as – (A) Fiscal deficit – interest payments (B) Revenue deficit – capital expenditure (C) Total expenditure – capital receipts (D) Borrowings – subsidies Answer: (A)
Net Domestic Product (NDP) = (A) GDP – Net exports (B) GDP – Depreciation (C) GNP – Transfers (D) GDP – Fiscal deficit Answer: (B)
Open market operations are conducted by RBI to – (A) Manage inflation (B) Regulate bank capital (C) Control foreign trade (D) Finance deficit Answer: (A)
The working age population in labor force terms refers to – (A) 0–14 years (B) 15–59 years (C) 18–60 years (D) 25–65 years Answer: (B)
Monetarism emphasizes – (A) Fiscal policy (B) Government control (C) Role of money supply in economic activity (D) Deficit financing Answer: (C)
Compensating variation measures – (A) Wage rate changes (B) Cost to maintain utility after a price change (C) Savings per capita (D) GNP deviation Answer: (B)
Dumping in trade refers to – (A) Selling below production cost abroad (B) Buying in bulk (C) Import bans (D) Foreign investment restrictions Answer: (A)
The money market is a market for – (A) Long-term securities (B) Real estate (C) Short-term funds and instruments (D) Currency exchange only Answer: (C)
Sovereign wealth funds (SWFs) are owned by – (A) Private investors (B) Central banks (C) Governments (D) Corporates Answer: (C)
Engel’s Law relates income changes to – (A) Exports (B) Government spending (C) Consumption pattern (D) Output growth Answer: (C)
Decoupling in global trade implies – (A) Increased dependence on global economy (B) Domestic economy unaffected by global shocks (C) Higher fiscal deficit (D) Tightening credit Answer: (B)
A perpetuity is a – (A) Temporary investment (B) Fixed annuity (C) Financial instrument with infinite life (D) Stock option Answer: (C)
Lumpiness in investment refers to – (A) Smooth capital flow (B) Small investments (C) Investments that require large initial cost (D) Portfolio diversification Answer: (C)
The gig economy primarily involves – (A) Contractual and freelance work (B) Full-time jobs (C) Government services (D) Rural employment Answer: (A)
Accelerator theory relates – (A) Tax growth (B) Interest and inflation (C) Investment to changes in output (D) Capital gains Answer: (C)
Inclusive development focuses on – (A) GDP only (B) Equity and participation across sectors (C) Urban industrialization (D) Fiscal deficit control Answer: (B)
Terms of trade improvement occurs when – (A) Export prices fall (B) Import prices rise (C) Export prices rise relative to import prices (D) GDP falls Answer: (C)
Harrod’s model has – (A) Unique equilibrium (B) Multiple growth paths (C) Warranted, actual, and natural growth rates (D) No capital role Answer: (C)
National income at market prices includes – (A) Direct taxes (B) Net indirect taxes (C) Depreciation (D) Transfers Answer: (B)
Informal sector is characterized by – (A) Regular contracts (B) Legal benefits (C) No written contracts and limited regulation (D) Organized employment Answer: (C)
Bretton Woods Conference (1944) led to creation of – (A) World Bank and IMF (B) WTO (C) OECD (D) UNDP Answer: (A)
Money neutrality means – (A) Inflation depends on money (B) Money supply affects only nominal variables (C) Money causes real growth (D) Fiscal policy is ineffective Answer: (B)
The digital divide in economics refers to – (A) Inequality in digital access and use (B) Trade imbalance (C) Urban–rural income gap (D) Global internet governance Answer: (A)
Elasticity of intertemporal substitution affects – (A) Labor mobility (B) Consumption across time (C) Investment efficiency (D) Wages Answer: (B)
The Kuznets curve hypothesizes – (A) Trade grows with GDP (B) Inequality first rises, then falls with income (C) Consumption rises exponentially (D) Investment always declines Answer: (B)