Money is neutral in the long run according to – (A) Classical theory (B) Keynesian theory (C) Monetarism (D) New Keynesian Answer: (A)
Factor income from abroad is added to – (A) GDP to get GNP (B) NNP to get GDP (C) GNP to get NNP (D) Disposable income to get national income Answer: (A)
Involuntary unemployment arises when – (A) Workers refuse jobs (B) Willing workers can’t find jobs at prevailing wage (C) Workers are overqualified (D) Seasonal jobs increase Answer: (B)
Okun’s Law shows relationship between – (A) Inflation and unemployment (B) Interest rate and savings (C) GDP and unemployment (D) Tax and fiscal deficit Answer: (C)
Dutch disease occurs when – (A) Currency weakens with trade surplus (B) A resource boom leads to decline in manufacturing (C) Budget deficit causes inflation (D) Productivity falls due to migration Answer: (B)
A flat supply curve suggests – (A) High elasticity (B) Low elasticity (C) No elasticity (D) Inelastic demand Answer: (A)
Capital gains tax is imposed on – (A) Salary income (B) Profits from asset sales (C) Rental income (D) Dividends Answer: (B)
Depreciation in national income accounting refers to – (A) Decline in currency value (B) Loss of capital value over time (C) Fall in exports (D) Tax loss Answer: (B)
The poverty gap indicates – (A) Number of poor (B) Depth of poverty below the poverty line (C) Per capita income (D) Employment rate Answer: (B)
A quasi-fiscal deficit arises due to – (A) State government spending (B) Central PSU losses (C) Off-budget subsidies by central banks or public entities (D) Trade imbalance Answer: (C)
NAFTA is a – (A) Political alliance (B) Currency union (C) Trade agreement (D) Fiscal monitoring group Answer: (C)
Stagflation features – (A) High inflation and high growth (B) Low inflation and growth (C) High inflation and unemployment (D) High exports Answer: (C)
Hotelling rule is applied in – (A) Renewable resources (B) Public finance (C) Non-renewable resource pricing (D) Welfare economics Answer: (C)
Marginal rate of substitution (MRS) declines due to – (A) Constant opportunity cost (B) Law of diminishing marginal utility (C) Tax reform (D) Price effect Answer: (B)
Bounded rationality suggests – (A) Perfect decisions always (B) Limited information leads to satisficing (C) Full foresight (D) Instant optimization Answer: (B)
Securities Transaction Tax (STT) is levied on – (A) Bank deposits (B) Online shopping (C) Sale/purchase of securities (D) Real estate Answer: (C)
Phillips Curve represents trade-off between – (A) GDP and growth (B) Unemployment and inflation (C) Interest and investment (D) Exports and imports Answer: (B)
A currency depreciation leads to – (A) Cheaper imports (B) Costlier exports (C) Improved trade balance (D) Decrease in domestic production Answer: (C)
Capital account in BoP includes – (A) Merchandise trade (B) Services (C) FDI, FII, loans (D) Remittances Answer: (C)
Demographic dividend is – (A) High child population (B) Declining population (C) Rising working-age population (D) High dependency ratio Answer: (C)
Normal goods have – (A) Negative income elasticity (B) Zero price elasticity (C) Positive income elasticity (D) Constant demand Answer: (C)
Income method of GDP adds – (A) Expenditure (B) Output (C) Factor incomes like wages, rent, interest, profit (D) Subsidies Answer: (C)
Giffen goods violate – (A) Law of demand (B) Law of supply (C) Law of marginal utility (D) Engel’s law Answer: (A)
Value added in GDP is – (A) Output – intermediate consumption (B) Revenue – tax (C) Profit – depreciation (D) Sales + investment Answer: (A)
Vicious cycle of poverty refers to – (A) High savings → high investment → poverty (B) Low income → low saving → low investment → low income (C) High income inequality (D) Government failure Answer: (B)
Effective exchange rate is – (A) Spot rate (B) Arbitrary conversion (C) Weighted average of bilateral exchange rates (D) Real GDP Answer: (C)
Equality vs. equity in economics implies – (A) Same treatment vs. fair outcomes (B) Equal income always (C) Minimum wage vs. living wage (D) Flat tax vs. progressive tax Answer: (A)
Creative destruction is associated with – (A) Karl Marx (B) John Keynes (C) Joseph Schumpeter (D) Amartya Sen Answer: (C)
Overvaluation of currency leads to – (A) Export competitiveness (B) Import increase, export fall (C) Improved balance of payments (D) Currency appreciation Answer: (B)
Tariff escalation occurs when – (A) Export taxes exceed import duties (B) Duties increase with processing level (C) Quotas are applied (D) Import costs fall Answer: (B)
Welfare economics studies – (A) Economic growth (B) Government spending (C) Efficiency and distribution of resources (D) National income only Answer: (C)
Progressive tax system leads to – (A) Regressive redistribution (B) Equal tax across all incomes (C) Greater burden on higher incomes (D) Tax neutrality Answer: (C)
Factor payments are paid for – (A) Transfer income (B) Contribution of land, labor, capital, entrepreneurship (C) Social schemes (D) Fiscal correction Answer: (B)
Current account of BoP includes – (A) Direct investment (B) Loans (C) Trade in goods and services, remittances (D) FII Answer: (C)
Base rate is set by – (A) RBI (B) Commercial banks (C) Ministry of Finance (D) SEBI Answer: (B)
Digital divide is an issue of – (A) Technological infrastructure inequality (B) Taxation (C) Foreign trade (D) Consumer behavior Answer: (A)
A pure public good is – (A) Rival and excludable (B) Non-rival and non-excludable (C) Private (D) Congestible Answer: (B)
Transfer payments include – (A) Salaries (B) Interest (C) Pensions and scholarships (D) Exports Answer: (C)
Subsidies are treated in national income accounting as – (A) Income (B) Negative taxes (C) Depreciation (D) Investment Answer: (B)
IMF’s primary role is – (A) Facilitate trade (B) Lend to countries facing BoP problems (C) Regulate interest (D) Manage inflation Answer: (B)
Disguised unemployment refers to – (A) More workers than required with zero marginal productivity (B) Open unemployment (C) Frictional unemployment (D) Educated unemployment Answer: (A)
Phillips curve flattens due to – (A) High inflation (B) Anchored expectations (C) High GDP (D) Tight fiscal policy Answer: (B)
Economic infrastructure includes – (A) Health, education (B) Transport, energy, communication (C) Politics (D) Media Answer: (B)
Laffer curve shows relationship between – (A) Interest rate and inflation (B) Tax rate and tax revenue (C) Price and quantity (D) Saving and consumption Answer: (B)
Frictional unemployment is – (A) Short-term during job search (B) Long-term structural (C) Due to low wages (D) Caused by inflation Answer: (A)
Marginal cost is – (A) Cost of producing one additional unit (B) Total cost (C) Fixed cost (D) Average cost Answer: (A)
Monetary policy transmission mechanism works through – (A) Taxation (B) Interest rates, liquidity, credit (C) Direct subsidies (D) Government expenditure Answer: (B)