Autarky in international trade refers to – (A) Free trade agreements (B) Complete trade liberalization (C) Economic self-sufficiency and no international trade (D) Bilateral trade pacts Answer: (C)
Y = C + I + G + (X – M) is the formula for – (A) Net Domestic Product (B) National Income at factor cost (C) GDP (expenditure method) (D) GNP Answer: (C)
Investment function in Keynesian theory depends primarily on – (A) Interest rate and business expectations (B) Government deficit (C) Tax rate (D) Wage level Answer: (A)
Purchasing Power Parity (PPP) compares – (A) GDP at current prices (B) Income inequality (C) Exchange rates adjusted for price levels (D) Real interest rates Answer: (C)
Zero coupon bond offers – (A) Periodic interest (B) No maturity (C) No interest but sold at discount (D) Variable rate Answer: (C)
A recession is defined by – (A) Two consecutive quarters of negative GDP growth (B) Persistent inflation (C) Current account surplus (D) Rapid tax rise Answer: (A)
Indexation is used to – (A) Raise prices (B) Link payments to inflation (C) Encourage savings (D) Reduce unemployment Answer: (B)
Capital deepening implies – (A) More labor per unit of capital (B) Increase in capital per worker (C) Increase in tax base (D) Wage suppression Answer: (B)
Monopsony power is held by – (A) A single buyer in a market (B) Government regulators (C) Central banks (D) A single seller in a market Answer: (A)
Ricardo’s theory of rent is based on – (A) Marginal productivity (B) Opportunity cost (C) Differential fertility of land (D) Capital returns Answer: (C)
A speculative bubble occurs when – (A) Asset prices reflect fundamentals (B) Prices are undervalued (C) Asset prices rise rapidly due to speculation, not fundamentals (D) Inflation is low Answer: (C)
Open economy multiplier is lower than closed because – (A) Higher savings (B) Taxation (C) Imports leak demand (D) Higher investment Answer: (C)
Positive economics deals with – (A) Value judgments (B) What ought to be (C) Objective analysis of facts (D) Normative welfare Answer: (C)
The Swan diagram is used for – (A) Inflation targeting (B) Open economy macro policy mix (C) Debt management (D) Wage setting Answer: (B)
A yield curve depicts relationship between – (A) Stock returns and dividends (B) Bond yields and maturities (C) Tax and inflation (D) Investment and savings Answer: (B)
Unemployment rate is calculated as – (A) Unemployed / labor force × 100 (B) Unemployed / total population × 100 (C) Labor force / population × 100 (D) Employed / unemployed × 100 Answer: (A)
A currency board maintains – (A) Multiple exchange rates (B) Flexible interest rates (C) Fixed exchange rate backed fully by reserves (D) Sovereign debt Answer: (C)
Capital flight refers to – (A) Increased domestic investment (B) Rapid outflow of financial capital from a country (C) FDI in manufacturing (D) Import substitution Answer: (B)
Excess capacity is a characteristic of – (A) Perfect competition (B) Monopoly (C) Monopolistic competition (D) Public goods Answer: (C)
Imputed rent is included in – (A) Nominal wages (B) GDP calculation (C) Capital account (D) Black income Answer: (B)
Say’s Law implies – (A) Demand creates its own supply (B) Supply creates its own demand (C) Money is neutral (D) Markets always fail Answer: (B)
The Fringe Benefit Tax (FBT) was abolished in India in – (A) 2010 (B) 2009 (C) 2011 (D) 2008 Answer: (B)
The broadest measure of money supply in India is – (A) M1 (B) M2 (C) M3 (D) M4 Answer: (D)
A quasi-public good is – (A) Fully excludable and rival (B) Fully non-rival and non-excludable (C) Non-rival but excludable (D) Fully free Answer: (C)
Lender of last resort is a function of – (A) NABARD (B) Ministry of Finance (C) RBI (D) SEBI Answer: (C)
Stabilization policy aims at – (A) Growth in agriculture (B) Reducing inequalities (C) Controlling inflation and unemployment (D) Enhancing defense expenditure Answer: (C)
The accelerator principle is triggered by – (A) Rise in income/output levels (B) Government borrowing (C) Import increase (D) Capital depreciation Answer: (A)
Debt-to-GDP ratio indicates – (A) Export dependency (B) Tax elasticity (C) Country’s debt sustainability (D) Consumption gap Answer: (C)
Inclusive growth promotes – (A) Growth with equity and participation (B) Urban industrial growth (C) Higher taxes (D) Military investment Answer: (A)
A tariff wall means – (A) Subsidies to exporters (B) Collection of non-tax revenue (C) High import duties protecting domestic industry (D) Tax reduction Answer: (C)
The inflationary gap occurs when – (A) Demand < potential GDP (B) Demand > potential GDP (C) Supply > demand (D) Interest rate = inflation Answer: (B)
Minimum Reserve System in India requires RBI to maintain – (A) Full gold backing (B) Minimum reserves of gold and foreign currency (C) Only rupees (D) Fixed inflation Answer: (B)
Tax-GDP ratio reflects – (A) Deficit growth (B) Tax collection as % of GDP (C) Inflation targeting (D) Revenue deficit Answer: (B)
The classical dichotomy separates – (A) Money and goods markets (B) Real and nominal variables (C) Short-run and long-run (D) Wages and prices Answer: (B)
Liquidity preference theory was proposed by – (A) Ricardo (B) Keynes (C) Marshall (D) Friedman Answer: (B)
Disinvestment reduces – (A) Trade deficit (B) Government ownership in PSUs (C) Tax collection (D) RBI’s reserves Answer: (B)
Marginal efficiency of investment (MEI) falls due to – (A) Increasing interest rate (B) Declining profitability of new capital (C) Tax reduction (D) Higher consumption Answer: (B)
Price leadership is common in – (A) Perfect competition (B) Monopoly (C) Oligopoly (D) Monopsony Answer: (C)
Unorganized sector in India includes – (A) Corporate firms (B) Registered companies (C) Street vendors, daily wage laborers (D) Government employees Answer: (C)
Bond yield and bond price are – (A) Positively related (B) Negatively related (C) Not related (D) Constant Answer: (B)
Twin track approach in policy means – (A) One policy for all (B) Different strategies for different sections (C) Unified pricing (D) Market equilibrium Answer: (B)
Dynamic efficiency in economics refers to – (A) Allocative efficiency in static sense (B) Efficiency over time through innovation (C) Price stability (D) Labor mobility Answer: (B)
Capital budget of government includes – (A) Salaries (B) Interest payments (C) Loans, disinvestment, capital receipts/expenditure (D) Welfare schemes Answer: (C)
Regressive taxation results in – (A) Progressive equity (B) Less burden on poor (C) Higher burden on lower income groups (D) No effect on inequality Answer: (C)
E-governance contributes to – (A) More physical paperwork (B) Digital divide (C) Efficiency and transparency (D) Less automation Answer: (C)
Exchange rate pass-through refers to – (A) Effect of exports on interest (B) Impact of exchange rate changes on domestic prices (C) Black market trade (D) Customs policy Answer: (B)
Circular debt is mainly associated with – (A) Banking sector (B) Defense spending (C) Power sector liabilities (D) Agriculture procurement Answer: (C)