[1] Which one of the following does not deal with export promotion?
A.
Trade Development Authority
B.
Minerals and Metals Trading Corporation
C.
Cooperative Marketing Societies
D.
Slate Trading Corporation of India
Ans:
Cooperative Marketing Societies
Explanation :
According to the Reserve Bank of India, co-operative marketing is a co-operatove association of cultivators formed primarily for the purpose of helping the members to market their produce more profitably than is possible through private trade. Under the system of co-operative marketing whole responsibility of marketing is taken up by the farmers themselves, organized on co-operative basis. The area of operation of marketing society is usually fixed with reference to local conditions - area based or commodity based. The commodity-based societies related to grapes, oranges, banana, pomegranate, etc.
[2] Which of the following sets belongs to Central tax?
A.
Excise duty, Sales tax and Custom duty
B.
Excise duty, Custom duly and Income tax
C.
Income tax, Custom duty and House, Lax
D.
Custom duty, Entertainment tax and Income tax
Ans:
Excise duty, Custom duly and Income tax
Explanation :
The Central Indian Government that is officially named as the "Union Government" is responsible for the imposition of both direct taxes as well indirect taxes. Listed below are some of the taxes that are levied by the India Government: Banking Cash Transaction Tax; Capital Gains Tax; Corporate Income Tax: Fringe Benefit Tax; Personal Income Tax; and Securities Transaction Tax. The indirect taxes are: Customs Duty; Excise Duty and Service Tax.
[3] Who defined 'Rent' as that portion or produce of the earth which is paid to the landlord for the use of original and indestructible power of the soil?
A.
Ricardo
B.
Marshall
C.
Keynes
D.
Plgou
Ans:
Ricardo
Explanation :
In his The Principles of Political Economy and Taxation (1821), David Ricardo stated: "Rent is that portion of the produce of the earth, which is paid to the landlord for the use of the original and indestructible powers of the soil. It is often, however, confounded with the interest and profit of capital, and, in popular language, the term is applied to whatever is annually paid by a farmer to his landlord.
[4] Economies of a firm are :
A.
An increase in its profits
B.
A reduction in its selling expenses
C.
Its dominance of the market
D.
Saving in it's production costs
Ans:
Saving in it's production costs
Explanation :
Economics of a firm includes how it combines labour and capital so as to lower the average cost of output, either from increasing, decreasing, or constant returns to scale for one product line or from economies of scope for more than one product line. It includes producing more units of a good or a service on a larger scale, yet with (on average) less input costs.
[5] The monetary policy is India is formulated by -
A.
Central Government
B.
Industrial Financial Corporation of India
C.
Reserve Bank of India
D.
Industrial Development Bank of India
Ans:
Reserve Bank of India
Explanation :
Monetary policy is the process by which monetary authority of a country, generally a central bank controls the supply of money in the economy by exercising its control over interest rates in order to maintain price stability and achieve high economic growth. In India, the central monetary authority is the Reserve Bank of India (RBI). is so designed as to maintain the price stability in the economy.
[6] The system of "Memorandum of Understanding” (MoU) was introduced in -
A.
1989 - 90
B.
1990 - 91
C.
1987 - 88
D.
1988 - 89
Ans:
1987 - 88
Explanation :
The System of Memorandum of Understanding was introduced in the Public Sector Enterprises during the year 1987-88 in India. It was based on the report of the Arjuna Sengupta Committee (1984).
[7] The upper limit of investment in plant and machinery for small-scale industries has been fixed currently at -
A.
Rs. 35 lakhs
B.
Rs. 45 lakhs
C.
Rs. 60 lakhs
D.
Rs. 1 crore
Ans:
Rs. 1 crore
Explanation :
The upper limit of investment in plant and machinery for small-scale industries has been fixed at Rs. one crore.
[8] What is USP in marketing field?
A.
Uninterrupted power supply
B.
Universal standards of production
C.
Us Programme based
D.
None of these
Ans:
None of these
Explanation :
The Unique Selling Proposition (a.k.a. Unique Selling Point, or USP) is a marketing concept that was first proposed as a theory to understand a pattern among successful advertising campaigns of the early 1940s. It states that such campaigns made unique propositions to the customer and that this convinced them to switch brands. The term was invented by Rosser Reeves of Ted Bates & Company. Today the term is used in other fields or just casually to refer to any aspect of an object that differentiates it from similar objects. The term USP has been largely replaced by the concept of a Positioning Statement.
[9] When too much money is chasing too few goods, the situation is -
A.
deflation
B.
inflation
C.
recession
D.
stagflation
Ans:
inflation
Explanation :
Demand-pull inflation is asserted to arise when aggregate demand in an economy outpaces aggregate supply. It involves inflation rising as real gross domestic product rises and unemployment falls, as the economy moves along the Phillips curve. This is commonly described as "too much money chasing too few goods". More accurately, it should be described as involving "too much money spent chasing too few goods", since only money that is spent on goods and services can cause inflation.
[10] When there is an official change in the exchange rate of domestic currency, then it is called :
A.
Appreciation
B.
Depreciation
C.
Revaluation
D.
Deflation
Ans:
Depreciation
Explanation :
Revaluation is a calculated adjustment to a country's official exchange rate relative to a chosen base- line. The baseline can be anything from wage rates to the price of gold to a foreign currency. In a fixed exchange rate regime, only a decision by a country's government (i.e. central bank) can alter the offici al value of the currency. It is opposite of devaluation.
[11] Inflation redistributes income and wealth in favour of :
A.
Pensioners
B.
Poor
C.
Middle class
D.
Rich
Ans:
Rich
Explanation :
A group of economists including Keynes is of the opinion that 'inflation, in one form or the other, is a factor which helps economic growth. Usually, it is argued that inflation tends to redistribute income and wealth. The redistributive effect of inflation is always in favour of profit-earning class, that is to say, It redistributes income always from the wage-recipient class towards the profit-recipient class in the community. As a result, the saving ratio will increase because the marginal propensity to save of the profit earners is generally high as against the high margin-al propensity to consume of the wage- earners because of their near-subsistence level of income.
[12] Money market is a market for -
A.
Short term fund
B.
Long term fund
C.
Negotiable instruments
D.
Sale of shares
Ans:
Short term fund
Explanation :
The money market is where financial instruments with high liquidity and very short maturities are traded. It is used by participants as a means for borrowing and lending in the short term, with maturities that usually range from overnight to just under a year. Some of the common money market instruments are: commercial paper, municipal notes, interest rate swaps, etc.
[13] MUDRA Bank has been launched to help -
A.
Small business
B.
Marginal farmers
C.
Poor women
D.
Rural sector
Ans:
Small business
Explanation :
Micro Units Development and Refinance Agency Bank (or MUDRA Bank) is a new institution setup by the Government of India to provide the funding to the non-corporate small business sector. It will provide its services to small entrepreneurs outside the service area of regular banks, by using last mile agents.
[14] Industrial exit policy means -
A.
forcing foreign companies to leave India
B.
forcing business units to move out of congested localities
C.
allowing manufacturers to shift their line of products
D.
allowing business units to close down
Ans:
allowing business units to close down
Explanation :
The term 'exit' is the obverse of the term 'entry' into industry. It refers to the right or ability of an industrial unit to withdraw from or leave an industry or in other words to close down. The proposal to introduce an exit policy was first mooted in 1991 when it was felt that without labor market flexibility, efficient industrialization would be difficult to achieve.
[15] Capital formation in an economy depends on -
A.
Total Income
B.
Tot al demand
C.
Total savings
D.
Total production
Ans:
Total savings
Explanation :
Capital formation refers to capital accumulation, referring to the total "stock of capital" that has been formed, or to the growth of this total capital stock. It also refers to a measure of the net additions to the (physical) capital stock of a country (or an economic sector) in an accounting interval, or, a measure of the amount by which the total physical capital stock increased during an accounting period.
[16] If the tax rate increases with the higher level of income, it shall be called -
A.
Proportional tax
B.
Progressive tax
C.
Lump sum tax
D.
Regressive tax
Ans:
Progressive tax
Explanation :
A progressive tax is a tax by which the tax rate increases as the taxable base amount increases." Progressive" describes a distribution effect on income or expenditure, referring to the way the rate progresses from low to high, where the average tax rate is less than the marginal tax rate. It can be applied to individual taxes or to a tax system as a whole; a year, multi-year, or lifetime. Progressive taxes attempt to reduce the tax incidence of people with a lower ability-to-pay, as they shift the incidence increasingly to those with a higher ability-to-pay.
[17] New capital issue is placed in -
A.
Secondary market
B.
Grey market
C.
Primary market
D.
Black market
Ans:
Primary market
Explanation :
The primary market is that part of the capital markets that deals with the issuance of new securities. Companies, governments or public sector institutions can obtain funding through the sale of a new stock or bond issue. This is the market for new long term equity capital. The primary market is the market where the securities are sold for the first time. Therefore it is also called the new issue market (NIM).
[18] If a country devalues its currency, its -
A.
Exports become cheaper and imports become costlier
B.
Exports become costlier and imports become cheaper.
C.
Exports value is equivalent to imports value
D.
No effect on exports and imports
Ans:
Exports become cheaper and imports become costlier
Explanation :
Devaluation means official lowering of the value of a country's currency within a fixed exchange rate system, by which the monetary authority formally sets a new fixed rate with respect to a foreign reference currency. Devaluation causes a country's exports to become less expensive, making them more competitive in the global market. This, in turn, means that imports are more expensive, making domestic consumers less likely to purchase them.
[19] 'Residex' is associated with -
A.
Share prices
B.
Price inflation
C.
Mutual fund prices
D.
Land prices
Ans:
Land prices
Explanation :
The RESIDEX was first launched in 2007 by the National Housing Bank (NHB) to provide an index of residential prices in India across cities and over time. It is the first housing price index in India. It was launched in order to fill price information gap and to streamline the process of development of property in various cities across the country.
[20] Which one of the following is not a function of the central bank in an economy?
A.
Dealing with foreign exchange
B.
Controlling monetary policy
C.
Controlling government spending
D.
Acting as a banker's bank
Ans:
Controlling government spending
Explanation :
A central bank, reserve bank, or monetary authority is a public institution that manages a state’s currency, money supply, and interest rates. Central banks also usually oversee the commercial banking system of their respective countries.
[21] In a period of inflation and price rises the supply of money remains -
A.
the same
B.
increases
C.
decreases
D.
increases or decreases pro-portionately.
Ans:
increases
Explanation :
Money supply is the total amount of monetary assets available in an economy at a specific time. The relation between money and prices is historically associated with the quantity theory of money. There is strong empirical evidence of a direct relation between long-term price inflation and money-supply growth, at least for rapid increases in the amount of money in the economy.
[22] Which of the following groups suffer the most from inflation?
A.
Debtros
B.
Creditors
C.
Business class
D.
Holders of real assets
Ans:
Creditors
Explanation :
Inflation, or the general rise of price levels in an economy, has many deleterious effects. It leaves the economy as a whole poorer relative to pre-inflation levels of wealth (individual and societal). Inflation reduces the value of each unit of currency and thus leaves the holder of that currency with lower purchasing power. Generally speaking, those who benefit from higher inflation are debtors and those who suffer from it- creditors. If one has substantial debt, each dollar one has to repay would be worth less than when it was borrowed.
[23] What is "narrow money"?
A.
The sum of currency in circulation and the demand deposits in banks
B.
The sum of MI money and the time deposits
C.
The sum of currency in circulation with the public and the cash reserves held by banks
D.
The market value of the stocks held by all the holders excluding the promoters
Ans:
The sum of currency in circulation and the demand deposits in banks
Explanation :
The four main monetary aggregates of measures of money supply which reflect the state of the monetary sector are:- (i) M1 (Narrow money)= Currency with the public + demand deposits of the public: (ii) M2 = M1 + Post Office Savings deposits: (iii) M3 (Broad money)= M1 + time deposits of the public with banks: and (iv) M4 = M3 + Total post office deposits. So 'Narrow Money' is simply a category of money supply that includes all physical money like coins and currency along with demand deposits and other liquid assets held by the central bank. This category of money is considered to be the most readily available for transactions and commerce.
[24] How the interest-level of a country is affected by FDI?
A.
increases
B.
decreases
C.
remains unaffected
D.
there is increase or decrease
Ans:
decreases
Explanation :
A higher international interest rate will decrease FDI since it means a higher cost of fund in international market, and vice versa. Interest rate is a measure of the cost of capital. A higher interest rate implies more costly investment and, therefore, the higher the interest rate, the more it is likely to defer FDI and the relationship between FDI and the interest rate is expected to be negative. Love and Lage-Hidalgo (2000) and Erdal and Tatoglu (22002), amongst others, find that an increase in the interest rate leads to a decrease in FDI. Interest rate and FDI can both be the cause and effect of other.
[25] If people's income of a country is denoted in a curved line space that it has increased, then what does it denote?
A.
the income is increasing
B.
the income is decreasing
C.
dissimilarity is decreasing in income distribution
D.
dissimilarity in income distribution is increasing
Ans:
dissimilarity is decreasing in income distribution
Explanation :
It shows inequality in income distribution. Inequality indices can also be derived directly from the Lorenz curve. Perhaps the most commonly-used inequality index is the Gini coefficient, which ranges from 0 (perfect equality) to 1 (perfect inequality). It is the ratio of the area enclosed by the Lorenz curve and the perfect equality line to the total area below that line.
Explanation :
According to the Reserve Bank of India, co-operative marketing is a co-operatove association of cultivators formed primarily for the purpose of helping the members to market their produce more profitably than is possible through private trade. Under the system of co-operative marketing whole responsibility of marketing is taken up by the farmers themselves, organized on co-operative basis. The area of operation of marketing society is usually fixed with reference to local conditions - area based or commodity based. The commodity-based societies related to grapes, oranges, banana, pomegranate, etc.
[2] Which of the following sets belongs to Central tax?
A.
Excise duty, Sales tax and Custom duty
B.
Excise duty, Custom duly and Income tax
C.
Income tax, Custom duty and House, Lax
D.
Custom duty, Entertainment tax and Income tax
Ans:
Excise duty, Custom duly and Income tax
Explanation :
The Central Indian Government that is officially named as the "Union Government" is responsible for the imposition of both direct taxes as well indirect taxes. Listed below are some of the taxes that are levied by the India Government: Banking Cash Transaction Tax; Capital Gains Tax; Corporate Income Tax: Fringe Benefit Tax; Personal Income Tax; and Securities Transaction Tax. The indirect taxes are: Customs Duty; Excise Duty and Service Tax.
[3] Who defined 'Rent' as that portion or produce of the earth which is paid to the landlord for the use of original and indestructible power of the soil?
A.
Ricardo
B.
Marshall
C.
Keynes
D.
Plgou
Ans:
Ricardo
Explanation :
In his The Principles of Political Economy and Taxation (1821), David Ricardo stated: "Rent is that portion of the produce of the earth, which is paid to the landlord for the use of the original and indestructible powers of the soil. It is often, however, confounded with the interest and profit of capital, and, in popular language, the term is applied to whatever is annually paid by a farmer to his landlord.
[4] Economies of a firm are :
A.
An increase in its profits
B.
A reduction in its selling expenses
C.
Its dominance of the market
D.
Saving in it's production costs
Ans:
Saving in it's production costs
Explanation :
Economics of a firm includes how it combines labour and capital so as to lower the average cost of output, either from increasing, decreasing, or constant returns to scale for one product line or from economies of scope for more than one product line. It includes producing more units of a good or a service on a larger scale, yet with (on average) less input costs.
[5] The monetary policy is India is formulated by -
A.
Central Government
B.
Industrial Financial Corporation of India
C.
Reserve Bank of India
D.
Industrial Development Bank of India
Ans:
Reserve Bank of India
Explanation :
Monetary policy is the process by which monetary authority of a country, generally a central bank controls the supply of money in the economy by exercising its control over interest rates in order to maintain price stability and achieve high economic growth. In India, the central monetary authority is the Reserve Bank of India (RBI). is so designed as to maintain the price stability in the economy.
[6] The system of "Memorandum of Understanding” (MoU) was introduced in -
A.
1989 - 90
B.
1990 - 91
C.
1987 - 88
D.
1988 - 89
Ans:
1987 - 88
Explanation :
The System of Memorandum of Understanding was introduced in the Public Sector Enterprises during the year 1987-88 in India. It was based on the report of the Arjuna Sengupta Committee (1984).
[7] The upper limit of investment in plant and machinery for small-scale industries has been fixed currently at -
A.
Rs. 35 lakhs
B.
Rs. 45 lakhs
C.
Rs. 60 lakhs
D.
Rs. 1 crore
Ans:
Rs. 1 crore
Explanation :
The upper limit of investment in plant and machinery for small-scale industries has been fixed at Rs. one crore.
[8] What is USP in marketing field?
A.
Uninterrupted power supply
B.
Universal standards of production
C.
Us Programme based
D.
None of these
Ans:
None of these
Explanation :
The Unique Selling Proposition (a.k.a. Unique Selling Point, or USP) is a marketing concept that was first proposed as a theory to understand a pattern among successful advertising campaigns of the early 1940s. It states that such campaigns made unique propositions to the customer and that this convinced them to switch brands. The term was invented by Rosser Reeves of Ted Bates & Company. Today the term is used in other fields or just casually to refer to any aspect of an object that differentiates it from similar objects. The term USP has been largely replaced by the concept of a Positioning Statement.
[9] When too much money is chasing too few goods, the situation is -
A.
deflation
B.
inflation
C.
recession
D.
stagflation
Ans:
inflation
Explanation :
Demand-pull inflation is asserted to arise when aggregate demand in an economy outpaces aggregate supply. It involves inflation rising as real gross domestic product rises and unemployment falls, as the economy moves along the Phillips curve. This is commonly described as "too much money chasing too few goods". More accurately, it should be described as involving "too much money spent chasing too few goods", since only money that is spent on goods and services can cause inflation.
[10] When there is an official change in the exchange rate of domestic currency, then it is called :
A.
Appreciation
B.
Depreciation
C.
Revaluation
D.
Deflation
Ans:
Depreciation
Explanation :
Revaluation is a calculated adjustment to a country's official exchange rate relative to a chosen base- line. The baseline can be anything from wage rates to the price of gold to a foreign currency. In a fixed exchange rate regime, only a decision by a country's government (i.e. central bank) can alter the offici al value of the currency. It is opposite of devaluation.
[11] Inflation redistributes income and wealth in favour of :
A.
Pensioners
B.
Poor
C.
Middle class
D.
Rich
Ans:
Rich
Explanation :
A group of economists including Keynes is of the opinion that 'inflation, in one form or the other, is a factor which helps economic growth. Usually, it is argued that inflation tends to redistribute income and wealth. The redistributive effect of inflation is always in favour of profit-earning class, that is to say, It redistributes income always from the wage-recipient class towards the profit-recipient class in the community. As a result, the saving ratio will increase because the marginal propensity to save of the profit earners is generally high as against the high margin-al propensity to consume of the wage- earners because of their near-subsistence level of income.
[12] Money market is a market for -
A.
Short term fund
B.
Long term fund
C.
Negotiable instruments
D.
Sale of shares
Ans:
Short term fund
Explanation :
The money market is where financial instruments with high liquidity and very short maturities are traded. It is used by participants as a means for borrowing and lending in the short term, with maturities that usually range from overnight to just under a year. Some of the common money market instruments are: commercial paper, municipal notes, interest rate swaps, etc.
[13] MUDRA Bank has been launched to help -
A.
Small business
B.
Marginal farmers
C.
Poor women
D.
Rural sector
Ans:
Small business
Explanation :
Micro Units Development and Refinance Agency Bank (or MUDRA Bank) is a new institution setup by the Government of India to provide the funding to the non-corporate small business sector. It will provide its services to small entrepreneurs outside the service area of regular banks, by using last mile agents.
[14] Industrial exit policy means -
A.
forcing foreign companies to leave India
B.
forcing business units to move out of congested localities
C.
allowing manufacturers to shift their line of products
D.
allowing business units to close down
Ans:
allowing business units to close down
Explanation :
The term 'exit' is the obverse of the term 'entry' into industry. It refers to the right or ability of an industrial unit to withdraw from or leave an industry or in other words to close down. The proposal to introduce an exit policy was first mooted in 1991 when it was felt that without labor market flexibility, efficient industrialization would be difficult to achieve.
[15] Capital formation in an economy depends on -
A.
Total Income
B.
Tot al demand
C.
Total savings
D.
Total production
Ans:
Total savings
Explanation :
Capital formation refers to capital accumulation, referring to the total "stock of capital" that has been formed, or to the growth of this total capital stock. It also refers to a measure of the net additions to the (physical) capital stock of a country (or an economic sector) in an accounting interval, or, a measure of the amount by which the total physical capital stock increased during an accounting period.
[16] If the tax rate increases with the higher level of income, it shall be called -
A.
Proportional tax
B.
Progressive tax
C.
Lump sum tax
D.
Regressive tax
Ans:
Progressive tax
Explanation :
A progressive tax is a tax by which the tax rate increases as the taxable base amount increases." Progressive" describes a distribution effect on income or expenditure, referring to the way the rate progresses from low to high, where the average tax rate is less than the marginal tax rate. It can be applied to individual taxes or to a tax system as a whole; a year, multi-year, or lifetime. Progressive taxes attempt to reduce the tax incidence of people with a lower ability-to-pay, as they shift the incidence increasingly to those with a higher ability-to-pay.
[17] New capital issue is placed in -
A.
Secondary market
B.
Grey market
C.
Primary market
D.
Black market
Ans:
Primary market
Explanation :
The primary market is that part of the capital markets that deals with the issuance of new securities. Companies, governments or public sector institutions can obtain funding through the sale of a new stock or bond issue. This is the market for new long term equity capital. The primary market is the market where the securities are sold for the first time. Therefore it is also called the new issue market (NIM).
[18] If a country devalues its currency, its -
A.
Exports become cheaper and imports become costlier
B.
Exports become costlier and imports become cheaper.
C.
Exports value is equivalent to imports value
D.
No effect on exports and imports
Ans:
Exports become cheaper and imports become costlier
Explanation :
Devaluation means official lowering of the value of a country's currency within a fixed exchange rate system, by which the monetary authority formally sets a new fixed rate with respect to a foreign reference currency. Devaluation causes a country's exports to become less expensive, making them more competitive in the global market. This, in turn, means that imports are more expensive, making domestic consumers less likely to purchase them.
[19] 'Residex' is associated with -
A.
Share prices
B.
Price inflation
C.
Mutual fund prices
D.
Land prices
Ans:
Land prices
Explanation :
The RESIDEX was first launched in 2007 by the National Housing Bank (NHB) to provide an index of residential prices in India across cities and over time. It is the first housing price index in India. It was launched in order to fill price information gap and to streamline the process of development of property in various cities across the country.
[20] Which one of the following is not a function of the central bank in an economy?
A.
Dealing with foreign exchange
B.
Controlling monetary policy
C.
Controlling government spending
D.
Acting as a banker's bank
Ans:
Controlling government spending
Explanation :
A central bank, reserve bank, or monetary authority is a public institution that manages a state’s currency, money supply, and interest rates. Central banks also usually oversee the commercial banking system of their respective countries.
[21] In a period of inflation and price rises the supply of money remains -
A.
the same
B.
increases
C.
decreases
D.
increases or decreases pro-portionately.
Ans:
increases
Explanation :
Money supply is the total amount of monetary assets available in an economy at a specific time. The relation between money and prices is historically associated with the quantity theory of money. There is strong empirical evidence of a direct relation between long-term price inflation and money-supply growth, at least for rapid increases in the amount of money in the economy.
[22] Which of the following groups suffer the most from inflation?
A.
Debtros
B.
Creditors
C.
Business class
D.
Holders of real assets
Ans:
Creditors
Explanation :
Inflation, or the general rise of price levels in an economy, has many deleterious effects. It leaves the economy as a whole poorer relative to pre-inflation levels of wealth (individual and societal). Inflation reduces the value of each unit of currency and thus leaves the holder of that currency with lower purchasing power. Generally speaking, those who benefit from higher inflation are debtors and those who suffer from it- creditors. If one has substantial debt, each dollar one has to repay would be worth less than when it was borrowed.
[23] What is "narrow money"?
A.
The sum of currency in circulation and the demand deposits in banks
B.
The sum of MI money and the time deposits
C.
The sum of currency in circulation with the public and the cash reserves held by banks
D.
The market value of the stocks held by all the holders excluding the promoters
Ans:
The sum of currency in circulation and the demand deposits in banks
Explanation :
The four main monetary aggregates of measures of money supply which reflect the state of the monetary sector are:- (i) M1 (Narrow money)= Currency with the public + demand deposits of the public: (ii) M2 = M1 + Post Office Savings deposits: (iii) M3 (Broad money)= M1 + time deposits of the public with banks: and (iv) M4 = M3 + Total post office deposits. So 'Narrow Money' is simply a category of money supply that includes all physical money like coins and currency along with demand deposits and other liquid assets held by the central bank. This category of money is considered to be the most readily available for transactions and commerce.
[24] How the interest-level of a country is affected by FDI?
A.
increases
B.
decreases
C.
remains unaffected
D.
there is increase or decrease
Ans:
decreases
Explanation :
A higher international interest rate will decrease FDI since it means a higher cost of fund in international market, and vice versa. Interest rate is a measure of the cost of capital. A higher interest rate implies more costly investment and, therefore, the higher the interest rate, the more it is likely to defer FDI and the relationship between FDI and the interest rate is expected to be negative. Love and Lage-Hidalgo (2000) and Erdal and Tatoglu (22002), amongst others, find that an increase in the interest rate leads to a decrease in FDI. Interest rate and FDI can both be the cause and effect of other.
[25] If people's income of a country is denoted in a curved line space that it has increased, then what does it denote?
A.
the income is increasing
B.
the income is decreasing
C.
dissimilarity is decreasing in income distribution
D.
dissimilarity in income distribution is increasing
Ans:
dissimilarity is decreasing in income distribution
Explanation :
It shows inequality in income distribution. Inequality indices can also be derived directly from the Lorenz curve. Perhaps the most commonly-used inequality index is the Gini coefficient, which ranges from 0 (perfect equality) to 1 (perfect inequality). It is the ratio of the area enclosed by the Lorenz curve and the perfect equality line to the total area below that line.
Explanation :
In his The Principles of Political Economy and Taxation (1821), David Ricardo stated: "Rent is that portion of the produce of the earth, which is paid to the landlord for the use of the original and indestructible powers of the soil. It is often, however, confounded with the interest and profit of capital, and, in popular language, the term is applied to whatever is annually paid by a farmer to his landlord.
[4] Economies of a firm are :
A.
An increase in its profits
B.
A reduction in its selling expenses
C.
Its dominance of the market
D.
Saving in it's production costs
Ans:
Saving in it's production costs
Explanation :
Economics of a firm includes how it combines labour and capital so as to lower the average cost of output, either from increasing, decreasing, or constant returns to scale for one product line or from economies of scope for more than one product line. It includes producing more units of a good or a service on a larger scale, yet with (on average) less input costs.
[5] The monetary policy is India is formulated by -
A.
Central Government
B.
Industrial Financial Corporation of India
C.
Reserve Bank of India
D.
Industrial Development Bank of India
Ans:
Reserve Bank of India
Explanation :
Monetary policy is the process by which monetary authority of a country, generally a central bank controls the supply of money in the economy by exercising its control over interest rates in order to maintain price stability and achieve high economic growth. In India, the central monetary authority is the Reserve Bank of India (RBI). is so designed as to maintain the price stability in the economy.
[6] The system of "Memorandum of Understanding” (MoU) was introduced in -
A.
1989 - 90
B.
1990 - 91
C.
1987 - 88
D.
1988 - 89
Ans:
1987 - 88
Explanation :
The System of Memorandum of Understanding was introduced in the Public Sector Enterprises during the year 1987-88 in India. It was based on the report of the Arjuna Sengupta Committee (1984).
[7] The upper limit of investment in plant and machinery for small-scale industries has been fixed currently at -
A.
Rs. 35 lakhs
B.
Rs. 45 lakhs
C.
Rs. 60 lakhs
D.
Rs. 1 crore
Ans:
Rs. 1 crore
Explanation :
The upper limit of investment in plant and machinery for small-scale industries has been fixed at Rs. one crore.
[8] What is USP in marketing field?
A.
Uninterrupted power supply
B.
Universal standards of production
C.
Us Programme based
D.
None of these
Ans:
None of these
Explanation :
The Unique Selling Proposition (a.k.a. Unique Selling Point, or USP) is a marketing concept that was first proposed as a theory to understand a pattern among successful advertising campaigns of the early 1940s. It states that such campaigns made unique propositions to the customer and that this convinced them to switch brands. The term was invented by Rosser Reeves of Ted Bates & Company. Today the term is used in other fields or just casually to refer to any aspect of an object that differentiates it from similar objects. The term USP has been largely replaced by the concept of a Positioning Statement.
[9] When too much money is chasing too few goods, the situation is -
A.
deflation
B.
inflation
C.
recession
D.
stagflation
Ans:
inflation
Explanation :
Demand-pull inflation is asserted to arise when aggregate demand in an economy outpaces aggregate supply. It involves inflation rising as real gross domestic product rises and unemployment falls, as the economy moves along the Phillips curve. This is commonly described as "too much money chasing too few goods". More accurately, it should be described as involving "too much money spent chasing too few goods", since only money that is spent on goods and services can cause inflation.
[10] When there is an official change in the exchange rate of domestic currency, then it is called :
A.
Appreciation
B.
Depreciation
C.
Revaluation
D.
Deflation
Ans:
Depreciation
Explanation :
Revaluation is a calculated adjustment to a country's official exchange rate relative to a chosen base- line. The baseline can be anything from wage rates to the price of gold to a foreign currency. In a fixed exchange rate regime, only a decision by a country's government (i.e. central bank) can alter the offici al value of the currency. It is opposite of devaluation.
[11] Inflation redistributes income and wealth in favour of :
A.
Pensioners
B.
Poor
C.
Middle class
D.
Rich
Ans:
Rich
Explanation :
A group of economists including Keynes is of the opinion that 'inflation, in one form or the other, is a factor which helps economic growth. Usually, it is argued that inflation tends to redistribute income and wealth. The redistributive effect of inflation is always in favour of profit-earning class, that is to say, It redistributes income always from the wage-recipient class towards the profit-recipient class in the community. As a result, the saving ratio will increase because the marginal propensity to save of the profit earners is generally high as against the high margin-al propensity to consume of the wage- earners because of their near-subsistence level of income.
[12] Money market is a market for -
A.
Short term fund
B.
Long term fund
C.
Negotiable instruments
D.
Sale of shares
Ans:
Short term fund
Explanation :
The money market is where financial instruments with high liquidity and very short maturities are traded. It is used by participants as a means for borrowing and lending in the short term, with maturities that usually range from overnight to just under a year. Some of the common money market instruments are: commercial paper, municipal notes, interest rate swaps, etc.
[13] MUDRA Bank has been launched to help -
A.
Small business
B.
Marginal farmers
C.
Poor women
D.
Rural sector
Ans:
Small business
Explanation :
Micro Units Development and Refinance Agency Bank (or MUDRA Bank) is a new institution setup by the Government of India to provide the funding to the non-corporate small business sector. It will provide its services to small entrepreneurs outside the service area of regular banks, by using last mile agents.
[14] Industrial exit policy means -
A.
forcing foreign companies to leave India
B.
forcing business units to move out of congested localities
C.
allowing manufacturers to shift their line of products
D.
allowing business units to close down
Ans:
allowing business units to close down
Explanation :
The term 'exit' is the obverse of the term 'entry' into industry. It refers to the right or ability of an industrial unit to withdraw from or leave an industry or in other words to close down. The proposal to introduce an exit policy was first mooted in 1991 when it was felt that without labor market flexibility, efficient industrialization would be difficult to achieve.
[15] Capital formation in an economy depends on -
A.
Total Income
B.
Tot al demand
C.
Total savings
D.
Total production
Ans:
Total savings
Explanation :
Capital formation refers to capital accumulation, referring to the total "stock of capital" that has been formed, or to the growth of this total capital stock. It also refers to a measure of the net additions to the (physical) capital stock of a country (or an economic sector) in an accounting interval, or, a measure of the amount by which the total physical capital stock increased during an accounting period.
[16] If the tax rate increases with the higher level of income, it shall be called -
A.
Proportional tax
B.
Progressive tax
C.
Lump sum tax
D.
Regressive tax
Ans:
Progressive tax
Explanation :
A progressive tax is a tax by which the tax rate increases as the taxable base amount increases." Progressive" describes a distribution effect on income or expenditure, referring to the way the rate progresses from low to high, where the average tax rate is less than the marginal tax rate. It can be applied to individual taxes or to a tax system as a whole; a year, multi-year, or lifetime. Progressive taxes attempt to reduce the tax incidence of people with a lower ability-to-pay, as they shift the incidence increasingly to those with a higher ability-to-pay.
[17] New capital issue is placed in -
A.
Secondary market
B.
Grey market
C.
Primary market
D.
Black market
Ans:
Primary market
Explanation :
The primary market is that part of the capital markets that deals with the issuance of new securities. Companies, governments or public sector institutions can obtain funding through the sale of a new stock or bond issue. This is the market for new long term equity capital. The primary market is the market where the securities are sold for the first time. Therefore it is also called the new issue market (NIM).
[18] If a country devalues its currency, its -
A.
Exports become cheaper and imports become costlier
B.
Exports become costlier and imports become cheaper.
C.
Exports value is equivalent to imports value
D.
No effect on exports and imports
Ans:
Exports become cheaper and imports become costlier
Explanation :
Devaluation means official lowering of the value of a country's currency within a fixed exchange rate system, by which the monetary authority formally sets a new fixed rate with respect to a foreign reference currency. Devaluation causes a country's exports to become less expensive, making them more competitive in the global market. This, in turn, means that imports are more expensive, making domestic consumers less likely to purchase them.
[19] 'Residex' is associated with -
A.
Share prices
B.
Price inflation
C.
Mutual fund prices
D.
Land prices
Ans:
Land prices
Explanation :
The RESIDEX was first launched in 2007 by the National Housing Bank (NHB) to provide an index of residential prices in India across cities and over time. It is the first housing price index in India. It was launched in order to fill price information gap and to streamline the process of development of property in various cities across the country.
[20] Which one of the following is not a function of the central bank in an economy?
A.
Dealing with foreign exchange
B.
Controlling monetary policy
C.
Controlling government spending
D.
Acting as a banker's bank
Ans:
Controlling government spending
Explanation :
A central bank, reserve bank, or monetary authority is a public institution that manages a state’s currency, money supply, and interest rates. Central banks also usually oversee the commercial banking system of their respective countries.
[21] In a period of inflation and price rises the supply of money remains -
A.
the same
B.
increases
C.
decreases
D.
increases or decreases pro-portionately.
Ans:
increases
Explanation :
Money supply is the total amount of monetary assets available in an economy at a specific time. The relation between money and prices is historically associated with the quantity theory of money. There is strong empirical evidence of a direct relation between long-term price inflation and money-supply growth, at least for rapid increases in the amount of money in the economy.
[22] Which of the following groups suffer the most from inflation?
A.
Debtros
B.
Creditors
C.
Business class
D.
Holders of real assets
Ans:
Creditors
Explanation :
Inflation, or the general rise of price levels in an economy, has many deleterious effects. It leaves the economy as a whole poorer relative to pre-inflation levels of wealth (individual and societal). Inflation reduces the value of each unit of currency and thus leaves the holder of that currency with lower purchasing power. Generally speaking, those who benefit from higher inflation are debtors and those who suffer from it- creditors. If one has substantial debt, each dollar one has to repay would be worth less than when it was borrowed.
[23] What is "narrow money"?
A.
The sum of currency in circulation and the demand deposits in banks
B.
The sum of MI money and the time deposits
C.
The sum of currency in circulation with the public and the cash reserves held by banks
D.
The market value of the stocks held by all the holders excluding the promoters
Ans:
The sum of currency in circulation and the demand deposits in banks
Explanation :
The four main monetary aggregates of measures of money supply which reflect the state of the monetary sector are:- (i) M1 (Narrow money)= Currency with the public + demand deposits of the public: (ii) M2 = M1 + Post Office Savings deposits: (iii) M3 (Broad money)= M1 + time deposits of the public with banks: and (iv) M4 = M3 + Total post office deposits. So 'Narrow Money' is simply a category of money supply that includes all physical money like coins and currency along with demand deposits and other liquid assets held by the central bank. This category of money is considered to be the most readily available for transactions and commerce.
[24] How the interest-level of a country is affected by FDI?
A.
increases
B.
decreases
C.
remains unaffected
D.
there is increase or decrease
Ans:
decreases
Explanation :
A higher international interest rate will decrease FDI since it means a higher cost of fund in international market, and vice versa. Interest rate is a measure of the cost of capital. A higher interest rate implies more costly investment and, therefore, the higher the interest rate, the more it is likely to defer FDI and the relationship between FDI and the interest rate is expected to be negative. Love and Lage-Hidalgo (2000) and Erdal and Tatoglu (22002), amongst others, find that an increase in the interest rate leads to a decrease in FDI. Interest rate and FDI can both be the cause and effect of other.
[25] If people's income of a country is denoted in a curved line space that it has increased, then what does it denote?
A.
the income is increasing
B.
the income is decreasing
C.
dissimilarity is decreasing in income distribution
D.
dissimilarity in income distribution is increasing
Ans:
dissimilarity is decreasing in income distribution
Explanation :
It shows inequality in income distribution. Inequality indices can also be derived directly from the Lorenz curve. Perhaps the most commonly-used inequality index is the Gini coefficient, which ranges from 0 (perfect equality) to 1 (perfect inequality). It is the ratio of the area enclosed by the Lorenz curve and the perfect equality line to the total area below that line.
Explanation :
Monetary policy is the process by which monetary authority of a country, generally a central bank controls the supply of money in the economy by exercising its control over interest rates in order to maintain price stability and achieve high economic growth. In India, the central monetary authority is the Reserve Bank of India (RBI). is so designed as to maintain the price stability in the economy.
[6] The system of "Memorandum of Understanding” (MoU) was introduced in -
A.
1989 - 90
B.
1990 - 91
C.
1987 - 88
D.
1988 - 89
Ans:
1987 - 88
Explanation :
The System of Memorandum of Understanding was introduced in the Public Sector Enterprises during the year 1987-88 in India. It was based on the report of the Arjuna Sengupta Committee (1984).
[7] The upper limit of investment in plant and machinery for small-scale industries has been fixed currently at -
A.
Rs. 35 lakhs
B.
Rs. 45 lakhs
C.
Rs. 60 lakhs
D.
Rs. 1 crore
Ans:
Rs. 1 crore
Explanation :
The upper limit of investment in plant and machinery for small-scale industries has been fixed at Rs. one crore.
[8] What is USP in marketing field?
A.
Uninterrupted power supply
B.
Universal standards of production
C.
Us Programme based
D.
None of these
Ans:
None of these
Explanation :
The Unique Selling Proposition (a.k.a. Unique Selling Point, or USP) is a marketing concept that was first proposed as a theory to understand a pattern among successful advertising campaigns of the early 1940s. It states that such campaigns made unique propositions to the customer and that this convinced them to switch brands. The term was invented by Rosser Reeves of Ted Bates & Company. Today the term is used in other fields or just casually to refer to any aspect of an object that differentiates it from similar objects. The term USP has been largely replaced by the concept of a Positioning Statement.
[9] When too much money is chasing too few goods, the situation is -
A.
deflation
B.
inflation
C.
recession
D.
stagflation
Ans:
inflation
Explanation :
Demand-pull inflation is asserted to arise when aggregate demand in an economy outpaces aggregate supply. It involves inflation rising as real gross domestic product rises and unemployment falls, as the economy moves along the Phillips curve. This is commonly described as "too much money chasing too few goods". More accurately, it should be described as involving "too much money spent chasing too few goods", since only money that is spent on goods and services can cause inflation.
[10] When there is an official change in the exchange rate of domestic currency, then it is called :
A.
Appreciation
B.
Depreciation
C.
Revaluation
D.
Deflation
Ans:
Depreciation
Explanation :
Revaluation is a calculated adjustment to a country's official exchange rate relative to a chosen base- line. The baseline can be anything from wage rates to the price of gold to a foreign currency. In a fixed exchange rate regime, only a decision by a country's government (i.e. central bank) can alter the offici al value of the currency. It is opposite of devaluation.
[11] Inflation redistributes income and wealth in favour of :
A.
Pensioners
B.
Poor
C.
Middle class
D.
Rich
Ans:
Rich
Explanation :
A group of economists including Keynes is of the opinion that 'inflation, in one form or the other, is a factor which helps economic growth. Usually, it is argued that inflation tends to redistribute income and wealth. The redistributive effect of inflation is always in favour of profit-earning class, that is to say, It redistributes income always from the wage-recipient class towards the profit-recipient class in the community. As a result, the saving ratio will increase because the marginal propensity to save of the profit earners is generally high as against the high margin-al propensity to consume of the wage- earners because of their near-subsistence level of income.
[12] Money market is a market for -
A.
Short term fund
B.
Long term fund
C.
Negotiable instruments
D.
Sale of shares
Ans:
Short term fund
Explanation :
The money market is where financial instruments with high liquidity and very short maturities are traded. It is used by participants as a means for borrowing and lending in the short term, with maturities that usually range from overnight to just under a year. Some of the common money market instruments are: commercial paper, municipal notes, interest rate swaps, etc.
[13] MUDRA Bank has been launched to help -
A.
Small business
B.
Marginal farmers
C.
Poor women
D.
Rural sector
Ans:
Small business
Explanation :
Micro Units Development and Refinance Agency Bank (or MUDRA Bank) is a new institution setup by the Government of India to provide the funding to the non-corporate small business sector. It will provide its services to small entrepreneurs outside the service area of regular banks, by using last mile agents.
[14] Industrial exit policy means -
A.
forcing foreign companies to leave India
B.
forcing business units to move out of congested localities
C.
allowing manufacturers to shift their line of products
D.
allowing business units to close down
Ans:
allowing business units to close down
Explanation :
The term 'exit' is the obverse of the term 'entry' into industry. It refers to the right or ability of an industrial unit to withdraw from or leave an industry or in other words to close down. The proposal to introduce an exit policy was first mooted in 1991 when it was felt that without labor market flexibility, efficient industrialization would be difficult to achieve.
[15] Capital formation in an economy depends on -
A.
Total Income
B.
Tot al demand
C.
Total savings
D.
Total production
Ans:
Total savings
Explanation :
Capital formation refers to capital accumulation, referring to the total "stock of capital" that has been formed, or to the growth of this total capital stock. It also refers to a measure of the net additions to the (physical) capital stock of a country (or an economic sector) in an accounting interval, or, a measure of the amount by which the total physical capital stock increased during an accounting period.
[16] If the tax rate increases with the higher level of income, it shall be called -
A.
Proportional tax
B.
Progressive tax
C.
Lump sum tax
D.
Regressive tax
Ans:
Progressive tax
Explanation :
A progressive tax is a tax by which the tax rate increases as the taxable base amount increases." Progressive" describes a distribution effect on income or expenditure, referring to the way the rate progresses from low to high, where the average tax rate is less than the marginal tax rate. It can be applied to individual taxes or to a tax system as a whole; a year, multi-year, or lifetime. Progressive taxes attempt to reduce the tax incidence of people with a lower ability-to-pay, as they shift the incidence increasingly to those with a higher ability-to-pay.
[17] New capital issue is placed in -
A.
Secondary market
B.
Grey market
C.
Primary market
D.
Black market
Ans:
Primary market
Explanation :
The primary market is that part of the capital markets that deals with the issuance of new securities. Companies, governments or public sector institutions can obtain funding through the sale of a new stock or bond issue. This is the market for new long term equity capital. The primary market is the market where the securities are sold for the first time. Therefore it is also called the new issue market (NIM).
[18] If a country devalues its currency, its -
A.
Exports become cheaper and imports become costlier
B.
Exports become costlier and imports become cheaper.
C.
Exports value is equivalent to imports value
D.
No effect on exports and imports
Ans:
Exports become cheaper and imports become costlier
Explanation :
Devaluation means official lowering of the value of a country's currency within a fixed exchange rate system, by which the monetary authority formally sets a new fixed rate with respect to a foreign reference currency. Devaluation causes a country's exports to become less expensive, making them more competitive in the global market. This, in turn, means that imports are more expensive, making domestic consumers less likely to purchase them.
[19] 'Residex' is associated with -
A.
Share prices
B.
Price inflation
C.
Mutual fund prices
D.
Land prices
Ans:
Land prices
Explanation :
The RESIDEX was first launched in 2007 by the National Housing Bank (NHB) to provide an index of residential prices in India across cities and over time. It is the first housing price index in India. It was launched in order to fill price information gap and to streamline the process of development of property in various cities across the country.
[20] Which one of the following is not a function of the central bank in an economy?
A.
Dealing with foreign exchange
B.
Controlling monetary policy
C.
Controlling government spending
D.
Acting as a banker's bank
Ans:
Controlling government spending
Explanation :
A central bank, reserve bank, or monetary authority is a public institution that manages a state’s currency, money supply, and interest rates. Central banks also usually oversee the commercial banking system of their respective countries.
[21] In a period of inflation and price rises the supply of money remains -
A.
the same
B.
increases
C.
decreases
D.
increases or decreases pro-portionately.
Ans:
increases
Explanation :
Money supply is the total amount of monetary assets available in an economy at a specific time. The relation between money and prices is historically associated with the quantity theory of money. There is strong empirical evidence of a direct relation between long-term price inflation and money-supply growth, at least for rapid increases in the amount of money in the economy.
[22] Which of the following groups suffer the most from inflation?
A.
Debtros
B.
Creditors
C.
Business class
D.
Holders of real assets
Ans:
Creditors
Explanation :
Inflation, or the general rise of price levels in an economy, has many deleterious effects. It leaves the economy as a whole poorer relative to pre-inflation levels of wealth (individual and societal). Inflation reduces the value of each unit of currency and thus leaves the holder of that currency with lower purchasing power. Generally speaking, those who benefit from higher inflation are debtors and those who suffer from it- creditors. If one has substantial debt, each dollar one has to repay would be worth less than when it was borrowed.
[23] What is "narrow money"?
A.
The sum of currency in circulation and the demand deposits in banks
B.
The sum of MI money and the time deposits
C.
The sum of currency in circulation with the public and the cash reserves held by banks
D.
The market value of the stocks held by all the holders excluding the promoters
Ans:
The sum of currency in circulation and the demand deposits in banks
Explanation :
The four main monetary aggregates of measures of money supply which reflect the state of the monetary sector are:- (i) M1 (Narrow money)= Currency with the public + demand deposits of the public: (ii) M2 = M1 + Post Office Savings deposits: (iii) M3 (Broad money)= M1 + time deposits of the public with banks: and (iv) M4 = M3 + Total post office deposits. So 'Narrow Money' is simply a category of money supply that includes all physical money like coins and currency along with demand deposits and other liquid assets held by the central bank. This category of money is considered to be the most readily available for transactions and commerce.
[24] How the interest-level of a country is affected by FDI?
A.
increases
B.
decreases
C.
remains unaffected
D.
there is increase or decrease
Ans:
decreases
Explanation :
A higher international interest rate will decrease FDI since it means a higher cost of fund in international market, and vice versa. Interest rate is a measure of the cost of capital. A higher interest rate implies more costly investment and, therefore, the higher the interest rate, the more it is likely to defer FDI and the relationship between FDI and the interest rate is expected to be negative. Love and Lage-Hidalgo (2000) and Erdal and Tatoglu (22002), amongst others, find that an increase in the interest rate leads to a decrease in FDI. Interest rate and FDI can both be the cause and effect of other.
[25] If people's income of a country is denoted in a curved line space that it has increased, then what does it denote?
A.
the income is increasing
B.
the income is decreasing
C.
dissimilarity is decreasing in income distribution
D.
dissimilarity in income distribution is increasing
Ans:
dissimilarity is decreasing in income distribution
Explanation :
It shows inequality in income distribution. Inequality indices can also be derived directly from the Lorenz curve. Perhaps the most commonly-used inequality index is the Gini coefficient, which ranges from 0 (perfect equality) to 1 (perfect inequality). It is the ratio of the area enclosed by the Lorenz curve and the perfect equality line to the total area below that line.
Explanation :
The upper limit of investment in plant and machinery for small-scale industries has been fixed at Rs. one crore.
[8] What is USP in marketing field?
A.
Uninterrupted power supply
B.
Universal standards of production
C.
Us Programme based
D.
None of these
Ans:
None of these
Explanation :
The Unique Selling Proposition (a.k.a. Unique Selling Point, or USP) is a marketing concept that was first proposed as a theory to understand a pattern among successful advertising campaigns of the early 1940s. It states that such campaigns made unique propositions to the customer and that this convinced them to switch brands. The term was invented by Rosser Reeves of Ted Bates & Company. Today the term is used in other fields or just casually to refer to any aspect of an object that differentiates it from similar objects. The term USP has been largely replaced by the concept of a Positioning Statement.
[9] When too much money is chasing too few goods, the situation is -
A.
deflation
B.
inflation
C.
recession
D.
stagflation
Ans:
inflation
Explanation :
Demand-pull inflation is asserted to arise when aggregate demand in an economy outpaces aggregate supply. It involves inflation rising as real gross domestic product rises and unemployment falls, as the economy moves along the Phillips curve. This is commonly described as "too much money chasing too few goods". More accurately, it should be described as involving "too much money spent chasing too few goods", since only money that is spent on goods and services can cause inflation.
[10] When there is an official change in the exchange rate of domestic currency, then it is called :
A.
Appreciation
B.
Depreciation
C.
Revaluation
D.
Deflation
Ans:
Depreciation
Explanation :
Revaluation is a calculated adjustment to a country's official exchange rate relative to a chosen base- line. The baseline can be anything from wage rates to the price of gold to a foreign currency. In a fixed exchange rate regime, only a decision by a country's government (i.e. central bank) can alter the offici al value of the currency. It is opposite of devaluation.
[11] Inflation redistributes income and wealth in favour of :
A.
Pensioners
B.
Poor
C.
Middle class
D.
Rich
Ans:
Rich
Explanation :
A group of economists including Keynes is of the opinion that 'inflation, in one form or the other, is a factor which helps economic growth. Usually, it is argued that inflation tends to redistribute income and wealth. The redistributive effect of inflation is always in favour of profit-earning class, that is to say, It redistributes income always from the wage-recipient class towards the profit-recipient class in the community. As a result, the saving ratio will increase because the marginal propensity to save of the profit earners is generally high as against the high margin-al propensity to consume of the wage- earners because of their near-subsistence level of income.
[12] Money market is a market for -
A.
Short term fund
B.
Long term fund
C.
Negotiable instruments
D.
Sale of shares
Ans:
Short term fund
Explanation :
The money market is where financial instruments with high liquidity and very short maturities are traded. It is used by participants as a means for borrowing and lending in the short term, with maturities that usually range from overnight to just under a year. Some of the common money market instruments are: commercial paper, municipal notes, interest rate swaps, etc.
[13] MUDRA Bank has been launched to help -
A.
Small business
B.
Marginal farmers
C.
Poor women
D.
Rural sector
Ans:
Small business
Explanation :
Micro Units Development and Refinance Agency Bank (or MUDRA Bank) is a new institution setup by the Government of India to provide the funding to the non-corporate small business sector. It will provide its services to small entrepreneurs outside the service area of regular banks, by using last mile agents.
[14] Industrial exit policy means -
A.
forcing foreign companies to leave India
B.
forcing business units to move out of congested localities
C.
allowing manufacturers to shift their line of products
D.
allowing business units to close down
Ans:
allowing business units to close down
Explanation :
The term 'exit' is the obverse of the term 'entry' into industry. It refers to the right or ability of an industrial unit to withdraw from or leave an industry or in other words to close down. The proposal to introduce an exit policy was first mooted in 1991 when it was felt that without labor market flexibility, efficient industrialization would be difficult to achieve.
[15] Capital formation in an economy depends on -
A.
Total Income
B.
Tot al demand
C.
Total savings
D.
Total production
Ans:
Total savings
Explanation :
Capital formation refers to capital accumulation, referring to the total "stock of capital" that has been formed, or to the growth of this total capital stock. It also refers to a measure of the net additions to the (physical) capital stock of a country (or an economic sector) in an accounting interval, or, a measure of the amount by which the total physical capital stock increased during an accounting period.
[16] If the tax rate increases with the higher level of income, it shall be called -
A.
Proportional tax
B.
Progressive tax
C.
Lump sum tax
D.
Regressive tax
Ans:
Progressive tax
Explanation :
A progressive tax is a tax by which the tax rate increases as the taxable base amount increases." Progressive" describes a distribution effect on income or expenditure, referring to the way the rate progresses from low to high, where the average tax rate is less than the marginal tax rate. It can be applied to individual taxes or to a tax system as a whole; a year, multi-year, or lifetime. Progressive taxes attempt to reduce the tax incidence of people with a lower ability-to-pay, as they shift the incidence increasingly to those with a higher ability-to-pay.
[17] New capital issue is placed in -
A.
Secondary market
B.
Grey market
C.
Primary market
D.
Black market
Ans:
Primary market
Explanation :
The primary market is that part of the capital markets that deals with the issuance of new securities. Companies, governments or public sector institutions can obtain funding through the sale of a new stock or bond issue. This is the market for new long term equity capital. The primary market is the market where the securities are sold for the first time. Therefore it is also called the new issue market (NIM).
[18] If a country devalues its currency, its -
A.
Exports become cheaper and imports become costlier
B.
Exports become costlier and imports become cheaper.
C.
Exports value is equivalent to imports value
D.
No effect on exports and imports
Ans:
Exports become cheaper and imports become costlier
Explanation :
Devaluation means official lowering of the value of a country's currency within a fixed exchange rate system, by which the monetary authority formally sets a new fixed rate with respect to a foreign reference currency. Devaluation causes a country's exports to become less expensive, making them more competitive in the global market. This, in turn, means that imports are more expensive, making domestic consumers less likely to purchase them.
[19] 'Residex' is associated with -
A.
Share prices
B.
Price inflation
C.
Mutual fund prices
D.
Land prices
Ans:
Land prices
Explanation :
The RESIDEX was first launched in 2007 by the National Housing Bank (NHB) to provide an index of residential prices in India across cities and over time. It is the first housing price index in India. It was launched in order to fill price information gap and to streamline the process of development of property in various cities across the country.
[20] Which one of the following is not a function of the central bank in an economy?
A.
Dealing with foreign exchange
B.
Controlling monetary policy
C.
Controlling government spending
D.
Acting as a banker's bank
Ans:
Controlling government spending
Explanation :
A central bank, reserve bank, or monetary authority is a public institution that manages a state’s currency, money supply, and interest rates. Central banks also usually oversee the commercial banking system of their respective countries.
[21] In a period of inflation and price rises the supply of money remains -
A.
the same
B.
increases
C.
decreases
D.
increases or decreases pro-portionately.
Ans:
increases
Explanation :
Money supply is the total amount of monetary assets available in an economy at a specific time. The relation between money and prices is historically associated with the quantity theory of money. There is strong empirical evidence of a direct relation between long-term price inflation and money-supply growth, at least for rapid increases in the amount of money in the economy.
[22] Which of the following groups suffer the most from inflation?
A.
Debtros
B.
Creditors
C.
Business class
D.
Holders of real assets
Ans:
Creditors
Explanation :
Inflation, or the general rise of price levels in an economy, has many deleterious effects. It leaves the economy as a whole poorer relative to pre-inflation levels of wealth (individual and societal). Inflation reduces the value of each unit of currency and thus leaves the holder of that currency with lower purchasing power. Generally speaking, those who benefit from higher inflation are debtors and those who suffer from it- creditors. If one has substantial debt, each dollar one has to repay would be worth less than when it was borrowed.
[23] What is "narrow money"?
A.
The sum of currency in circulation and the demand deposits in banks
B.
The sum of MI money and the time deposits
C.
The sum of currency in circulation with the public and the cash reserves held by banks
D.
The market value of the stocks held by all the holders excluding the promoters
Ans:
The sum of currency in circulation and the demand deposits in banks
Explanation :
The four main monetary aggregates of measures of money supply which reflect the state of the monetary sector are:- (i) M1 (Narrow money)= Currency with the public + demand deposits of the public: (ii) M2 = M1 + Post Office Savings deposits: (iii) M3 (Broad money)= M1 + time deposits of the public with banks: and (iv) M4 = M3 + Total post office deposits. So 'Narrow Money' is simply a category of money supply that includes all physical money like coins and currency along with demand deposits and other liquid assets held by the central bank. This category of money is considered to be the most readily available for transactions and commerce.
[24] How the interest-level of a country is affected by FDI?
A.
increases
B.
decreases
C.
remains unaffected
D.
there is increase or decrease
Ans:
decreases
Explanation :
A higher international interest rate will decrease FDI since it means a higher cost of fund in international market, and vice versa. Interest rate is a measure of the cost of capital. A higher interest rate implies more costly investment and, therefore, the higher the interest rate, the more it is likely to defer FDI and the relationship between FDI and the interest rate is expected to be negative. Love and Lage-Hidalgo (2000) and Erdal and Tatoglu (22002), amongst others, find that an increase in the interest rate leads to a decrease in FDI. Interest rate and FDI can both be the cause and effect of other.
[25] If people's income of a country is denoted in a curved line space that it has increased, then what does it denote?
A.
the income is increasing
B.
the income is decreasing
C.
dissimilarity is decreasing in income distribution
D.
dissimilarity in income distribution is increasing
Ans:
dissimilarity is decreasing in income distribution
Explanation :
It shows inequality in income distribution. Inequality indices can also be derived directly from the Lorenz curve. Perhaps the most commonly-used inequality index is the Gini coefficient, which ranges from 0 (perfect equality) to 1 (perfect inequality). It is the ratio of the area enclosed by the Lorenz curve and the perfect equality line to the total area below that line.
Explanation :
Demand-pull inflation is asserted to arise when aggregate demand in an economy outpaces aggregate supply. It involves inflation rising as real gross domestic product rises and unemployment falls, as the economy moves along the Phillips curve. This is commonly described as "too much money chasing too few goods". More accurately, it should be described as involving "too much money spent chasing too few goods", since only money that is spent on goods and services can cause inflation.
[10] When there is an official change in the exchange rate of domestic currency, then it is called :
A.
Appreciation
B.
Depreciation
C.
Revaluation
D.
Deflation
Ans:
Depreciation
Explanation :
Revaluation is a calculated adjustment to a country's official exchange rate relative to a chosen base- line. The baseline can be anything from wage rates to the price of gold to a foreign currency. In a fixed exchange rate regime, only a decision by a country's government (i.e. central bank) can alter the offici al value of the currency. It is opposite of devaluation.
[11] Inflation redistributes income and wealth in favour of :
A.
Pensioners
B.
Poor
C.
Middle class
D.
Rich
Ans:
Rich
Explanation :
A group of economists including Keynes is of the opinion that 'inflation, in one form or the other, is a factor which helps economic growth. Usually, it is argued that inflation tends to redistribute income and wealth. The redistributive effect of inflation is always in favour of profit-earning class, that is to say, It redistributes income always from the wage-recipient class towards the profit-recipient class in the community. As a result, the saving ratio will increase because the marginal propensity to save of the profit earners is generally high as against the high margin-al propensity to consume of the wage- earners because of their near-subsistence level of income.
[12] Money market is a market for -
A.
Short term fund
B.
Long term fund
C.
Negotiable instruments
D.
Sale of shares
Ans:
Short term fund
Explanation :
The money market is where financial instruments with high liquidity and very short maturities are traded. It is used by participants as a means for borrowing and lending in the short term, with maturities that usually range from overnight to just under a year. Some of the common money market instruments are: commercial paper, municipal notes, interest rate swaps, etc.
[13] MUDRA Bank has been launched to help -
A.
Small business
B.
Marginal farmers
C.
Poor women
D.
Rural sector
Ans:
Small business
Explanation :
Micro Units Development and Refinance Agency Bank (or MUDRA Bank) is a new institution setup by the Government of India to provide the funding to the non-corporate small business sector. It will provide its services to small entrepreneurs outside the service area of regular banks, by using last mile agents.
[14] Industrial exit policy means -
A.
forcing foreign companies to leave India
B.
forcing business units to move out of congested localities
C.
allowing manufacturers to shift their line of products
D.
allowing business units to close down
Ans:
allowing business units to close down
Explanation :
The term 'exit' is the obverse of the term 'entry' into industry. It refers to the right or ability of an industrial unit to withdraw from or leave an industry or in other words to close down. The proposal to introduce an exit policy was first mooted in 1991 when it was felt that without labor market flexibility, efficient industrialization would be difficult to achieve.
[15] Capital formation in an economy depends on -
A.
Total Income
B.
Tot al demand
C.
Total savings
D.
Total production
Ans:
Total savings
Explanation :
Capital formation refers to capital accumulation, referring to the total "stock of capital" that has been formed, or to the growth of this total capital stock. It also refers to a measure of the net additions to the (physical) capital stock of a country (or an economic sector) in an accounting interval, or, a measure of the amount by which the total physical capital stock increased during an accounting period.
[16] If the tax rate increases with the higher level of income, it shall be called -
A.
Proportional tax
B.
Progressive tax
C.
Lump sum tax
D.
Regressive tax
Ans:
Progressive tax
Explanation :
A progressive tax is a tax by which the tax rate increases as the taxable base amount increases." Progressive" describes a distribution effect on income or expenditure, referring to the way the rate progresses from low to high, where the average tax rate is less than the marginal tax rate. It can be applied to individual taxes or to a tax system as a whole; a year, multi-year, or lifetime. Progressive taxes attempt to reduce the tax incidence of people with a lower ability-to-pay, as they shift the incidence increasingly to those with a higher ability-to-pay.
[17] New capital issue is placed in -
A.
Secondary market
B.
Grey market
C.
Primary market
D.
Black market
Ans:
Primary market
Explanation :
The primary market is that part of the capital markets that deals with the issuance of new securities. Companies, governments or public sector institutions can obtain funding through the sale of a new stock or bond issue. This is the market for new long term equity capital. The primary market is the market where the securities are sold for the first time. Therefore it is also called the new issue market (NIM).
[18] If a country devalues its currency, its -
A.
Exports become cheaper and imports become costlier
B.
Exports become costlier and imports become cheaper.
C.
Exports value is equivalent to imports value
D.
No effect on exports and imports
Ans:
Exports become cheaper and imports become costlier
Explanation :
Devaluation means official lowering of the value of a country's currency within a fixed exchange rate system, by which the monetary authority formally sets a new fixed rate with respect to a foreign reference currency. Devaluation causes a country's exports to become less expensive, making them more competitive in the global market. This, in turn, means that imports are more expensive, making domestic consumers less likely to purchase them.
[19] 'Residex' is associated with -
A.
Share prices
B.
Price inflation
C.
Mutual fund prices
D.
Land prices
Ans:
Land prices
Explanation :
The RESIDEX was first launched in 2007 by the National Housing Bank (NHB) to provide an index of residential prices in India across cities and over time. It is the first housing price index in India. It was launched in order to fill price information gap and to streamline the process of development of property in various cities across the country.
[20] Which one of the following is not a function of the central bank in an economy?
A.
Dealing with foreign exchange
B.
Controlling monetary policy
C.
Controlling government spending
D.
Acting as a banker's bank
Ans:
Controlling government spending
Explanation :
A central bank, reserve bank, or monetary authority is a public institution that manages a state’s currency, money supply, and interest rates. Central banks also usually oversee the commercial banking system of their respective countries.
[21] In a period of inflation and price rises the supply of money remains -
A.
the same
B.
increases
C.
decreases
D.
increases or decreases pro-portionately.
Ans:
increases
Explanation :
Money supply is the total amount of monetary assets available in an economy at a specific time. The relation between money and prices is historically associated with the quantity theory of money. There is strong empirical evidence of a direct relation between long-term price inflation and money-supply growth, at least for rapid increases in the amount of money in the economy.
[22] Which of the following groups suffer the most from inflation?
A.
Debtros
B.
Creditors
C.
Business class
D.
Holders of real assets
Ans:
Creditors
Explanation :
Inflation, or the general rise of price levels in an economy, has many deleterious effects. It leaves the economy as a whole poorer relative to pre-inflation levels of wealth (individual and societal). Inflation reduces the value of each unit of currency and thus leaves the holder of that currency with lower purchasing power. Generally speaking, those who benefit from higher inflation are debtors and those who suffer from it- creditors. If one has substantial debt, each dollar one has to repay would be worth less than when it was borrowed.
[23] What is "narrow money"?
A.
The sum of currency in circulation and the demand deposits in banks
B.
The sum of MI money and the time deposits
C.
The sum of currency in circulation with the public and the cash reserves held by banks
D.
The market value of the stocks held by all the holders excluding the promoters
Ans:
The sum of currency in circulation and the demand deposits in banks
Explanation :
The four main monetary aggregates of measures of money supply which reflect the state of the monetary sector are:- (i) M1 (Narrow money)= Currency with the public + demand deposits of the public: (ii) M2 = M1 + Post Office Savings deposits: (iii) M3 (Broad money)= M1 + time deposits of the public with banks: and (iv) M4 = M3 + Total post office deposits. So 'Narrow Money' is simply a category of money supply that includes all physical money like coins and currency along with demand deposits and other liquid assets held by the central bank. This category of money is considered to be the most readily available for transactions and commerce.
[24] How the interest-level of a country is affected by FDI?
A.
increases
B.
decreases
C.
remains unaffected
D.
there is increase or decrease
Ans:
decreases
Explanation :
A higher international interest rate will decrease FDI since it means a higher cost of fund in international market, and vice versa. Interest rate is a measure of the cost of capital. A higher interest rate implies more costly investment and, therefore, the higher the interest rate, the more it is likely to defer FDI and the relationship between FDI and the interest rate is expected to be negative. Love and Lage-Hidalgo (2000) and Erdal and Tatoglu (22002), amongst others, find that an increase in the interest rate leads to a decrease in FDI. Interest rate and FDI can both be the cause and effect of other.
[25] If people's income of a country is denoted in a curved line space that it has increased, then what does it denote?
A.
the income is increasing
B.
the income is decreasing
C.
dissimilarity is decreasing in income distribution
D.
dissimilarity in income distribution is increasing
Ans:
dissimilarity is decreasing in income distribution
Explanation :
It shows inequality in income distribution. Inequality indices can also be derived directly from the Lorenz curve. Perhaps the most commonly-used inequality index is the Gini coefficient, which ranges from 0 (perfect equality) to 1 (perfect inequality). It is the ratio of the area enclosed by the Lorenz curve and the perfect equality line to the total area below that line.
Explanation :
A group of economists including Keynes is of the opinion that 'inflation, in one form or the other, is a factor which helps economic growth. Usually, it is argued that inflation tends to redistribute income and wealth. The redistributive effect of inflation is always in favour of profit-earning class, that is to say, It redistributes income always from the wage-recipient class towards the profit-recipient class in the community. As a result, the saving ratio will increase because the marginal propensity to save of the profit earners is generally high as against the high margin-al propensity to consume of the wage- earners because of their near-subsistence level of income.
[12] Money market is a market for -
A.
Short term fund
B.
Long term fund
C.
Negotiable instruments
D.
Sale of shares
Ans:
Short term fund
Explanation :
The money market is where financial instruments with high liquidity and very short maturities are traded. It is used by participants as a means for borrowing and lending in the short term, with maturities that usually range from overnight to just under a year. Some of the common money market instruments are: commercial paper, municipal notes, interest rate swaps, etc.
[13] MUDRA Bank has been launched to help -
A.
Small business
B.
Marginal farmers
C.
Poor women
D.
Rural sector
Ans:
Small business
Explanation :
Micro Units Development and Refinance Agency Bank (or MUDRA Bank) is a new institution setup by the Government of India to provide the funding to the non-corporate small business sector. It will provide its services to small entrepreneurs outside the service area of regular banks, by using last mile agents.
[14] Industrial exit policy means -
A.
forcing foreign companies to leave India
B.
forcing business units to move out of congested localities
C.
allowing manufacturers to shift their line of products
D.
allowing business units to close down
Ans:
allowing business units to close down
Explanation :
The term 'exit' is the obverse of the term 'entry' into industry. It refers to the right or ability of an industrial unit to withdraw from or leave an industry or in other words to close down. The proposal to introduce an exit policy was first mooted in 1991 when it was felt that without labor market flexibility, efficient industrialization would be difficult to achieve.
[15] Capital formation in an economy depends on -
A.
Total Income
B.
Tot al demand
C.
Total savings
D.
Total production
Ans:
Total savings
Explanation :
Capital formation refers to capital accumulation, referring to the total "stock of capital" that has been formed, or to the growth of this total capital stock. It also refers to a measure of the net additions to the (physical) capital stock of a country (or an economic sector) in an accounting interval, or, a measure of the amount by which the total physical capital stock increased during an accounting period.
[16] If the tax rate increases with the higher level of income, it shall be called -
A.
Proportional tax
B.
Progressive tax
C.
Lump sum tax
D.
Regressive tax
Ans:
Progressive tax
Explanation :
A progressive tax is a tax by which the tax rate increases as the taxable base amount increases." Progressive" describes a distribution effect on income or expenditure, referring to the way the rate progresses from low to high, where the average tax rate is less than the marginal tax rate. It can be applied to individual taxes or to a tax system as a whole; a year, multi-year, or lifetime. Progressive taxes attempt to reduce the tax incidence of people with a lower ability-to-pay, as they shift the incidence increasingly to those with a higher ability-to-pay.
[17] New capital issue is placed in -
A.
Secondary market
B.
Grey market
C.
Primary market
D.
Black market
Ans:
Primary market
Explanation :
The primary market is that part of the capital markets that deals with the issuance of new securities. Companies, governments or public sector institutions can obtain funding through the sale of a new stock or bond issue. This is the market for new long term equity capital. The primary market is the market where the securities are sold for the first time. Therefore it is also called the new issue market (NIM).
[18] If a country devalues its currency, its -
A.
Exports become cheaper and imports become costlier
B.
Exports become costlier and imports become cheaper.
C.
Exports value is equivalent to imports value
D.
No effect on exports and imports
Ans:
Exports become cheaper and imports become costlier
Explanation :
Devaluation means official lowering of the value of a country's currency within a fixed exchange rate system, by which the monetary authority formally sets a new fixed rate with respect to a foreign reference currency. Devaluation causes a country's exports to become less expensive, making them more competitive in the global market. This, in turn, means that imports are more expensive, making domestic consumers less likely to purchase them.
[19] 'Residex' is associated with -
A.
Share prices
B.
Price inflation
C.
Mutual fund prices
D.
Land prices
Ans:
Land prices
Explanation :
The RESIDEX was first launched in 2007 by the National Housing Bank (NHB) to provide an index of residential prices in India across cities and over time. It is the first housing price index in India. It was launched in order to fill price information gap and to streamline the process of development of property in various cities across the country.
[20] Which one of the following is not a function of the central bank in an economy?
A.
Dealing with foreign exchange
B.
Controlling monetary policy
C.
Controlling government spending
D.
Acting as a banker's bank
Ans:
Controlling government spending
Explanation :
A central bank, reserve bank, or monetary authority is a public institution that manages a state’s currency, money supply, and interest rates. Central banks also usually oversee the commercial banking system of their respective countries.
[21] In a period of inflation and price rises the supply of money remains -
A.
the same
B.
increases
C.
decreases
D.
increases or decreases pro-portionately.
Ans:
increases
Explanation :
Money supply is the total amount of monetary assets available in an economy at a specific time. The relation between money and prices is historically associated with the quantity theory of money. There is strong empirical evidence of a direct relation between long-term price inflation and money-supply growth, at least for rapid increases in the amount of money in the economy.
[22] Which of the following groups suffer the most from inflation?
A.
Debtros
B.
Creditors
C.
Business class
D.
Holders of real assets
Ans:
Creditors
Explanation :
Inflation, or the general rise of price levels in an economy, has many deleterious effects. It leaves the economy as a whole poorer relative to pre-inflation levels of wealth (individual and societal). Inflation reduces the value of each unit of currency and thus leaves the holder of that currency with lower purchasing power. Generally speaking, those who benefit from higher inflation are debtors and those who suffer from it- creditors. If one has substantial debt, each dollar one has to repay would be worth less than when it was borrowed.
[23] What is "narrow money"?
A.
The sum of currency in circulation and the demand deposits in banks
B.
The sum of MI money and the time deposits
C.
The sum of currency in circulation with the public and the cash reserves held by banks
D.
The market value of the stocks held by all the holders excluding the promoters
Ans:
The sum of currency in circulation and the demand deposits in banks
Explanation :
The four main monetary aggregates of measures of money supply which reflect the state of the monetary sector are:- (i) M1 (Narrow money)= Currency with the public + demand deposits of the public: (ii) M2 = M1 + Post Office Savings deposits: (iii) M3 (Broad money)= M1 + time deposits of the public with banks: and (iv) M4 = M3 + Total post office deposits. So 'Narrow Money' is simply a category of money supply that includes all physical money like coins and currency along with demand deposits and other liquid assets held by the central bank. This category of money is considered to be the most readily available for transactions and commerce.
[24] How the interest-level of a country is affected by FDI?
A.
increases
B.
decreases
C.
remains unaffected
D.
there is increase or decrease
Ans:
decreases
Explanation :
A higher international interest rate will decrease FDI since it means a higher cost of fund in international market, and vice versa. Interest rate is a measure of the cost of capital. A higher interest rate implies more costly investment and, therefore, the higher the interest rate, the more it is likely to defer FDI and the relationship between FDI and the interest rate is expected to be negative. Love and Lage-Hidalgo (2000) and Erdal and Tatoglu (22002), amongst others, find that an increase in the interest rate leads to a decrease in FDI. Interest rate and FDI can both be the cause and effect of other.
[25] If people's income of a country is denoted in a curved line space that it has increased, then what does it denote?
A.
the income is increasing
B.
the income is decreasing
C.
dissimilarity is decreasing in income distribution
D.
dissimilarity in income distribution is increasing
Ans:
dissimilarity is decreasing in income distribution
Explanation :
It shows inequality in income distribution. Inequality indices can also be derived directly from the Lorenz curve. Perhaps the most commonly-used inequality index is the Gini coefficient, which ranges from 0 (perfect equality) to 1 (perfect inequality). It is the ratio of the area enclosed by the Lorenz curve and the perfect equality line to the total area below that line.
Explanation :
Micro Units Development and Refinance Agency Bank (or MUDRA Bank) is a new institution setup by the Government of India to provide the funding to the non-corporate small business sector. It will provide its services to small entrepreneurs outside the service area of regular banks, by using last mile agents.
[14] Industrial exit policy means -
A.
forcing foreign companies to leave India
B.
forcing business units to move out of congested localities
C.
allowing manufacturers to shift their line of products
D.
allowing business units to close down
Ans:
allowing business units to close down
Explanation :
The term 'exit' is the obverse of the term 'entry' into industry. It refers to the right or ability of an industrial unit to withdraw from or leave an industry or in other words to close down. The proposal to introduce an exit policy was first mooted in 1991 when it was felt that without labor market flexibility, efficient industrialization would be difficult to achieve.
[15] Capital formation in an economy depends on -
A.
Total Income
B.
Tot al demand
C.
Total savings
D.
Total production
Ans:
Total savings
Explanation :
Capital formation refers to capital accumulation, referring to the total "stock of capital" that has been formed, or to the growth of this total capital stock. It also refers to a measure of the net additions to the (physical) capital stock of a country (or an economic sector) in an accounting interval, or, a measure of the amount by which the total physical capital stock increased during an accounting period.
[16] If the tax rate increases with the higher level of income, it shall be called -
A.
Proportional tax
B.
Progressive tax
C.
Lump sum tax
D.
Regressive tax
Ans:
Progressive tax
Explanation :
A progressive tax is a tax by which the tax rate increases as the taxable base amount increases." Progressive" describes a distribution effect on income or expenditure, referring to the way the rate progresses from low to high, where the average tax rate is less than the marginal tax rate. It can be applied to individual taxes or to a tax system as a whole; a year, multi-year, or lifetime. Progressive taxes attempt to reduce the tax incidence of people with a lower ability-to-pay, as they shift the incidence increasingly to those with a higher ability-to-pay.
[17] New capital issue is placed in -
A.
Secondary market
B.
Grey market
C.
Primary market
D.
Black market
Ans:
Primary market
Explanation :
The primary market is that part of the capital markets that deals with the issuance of new securities. Companies, governments or public sector institutions can obtain funding through the sale of a new stock or bond issue. This is the market for new long term equity capital. The primary market is the market where the securities are sold for the first time. Therefore it is also called the new issue market (NIM).
[18] If a country devalues its currency, its -
A.
Exports become cheaper and imports become costlier
B.
Exports become costlier and imports become cheaper.
C.
Exports value is equivalent to imports value
D.
No effect on exports and imports
Ans:
Exports become cheaper and imports become costlier
Explanation :
Devaluation means official lowering of the value of a country's currency within a fixed exchange rate system, by which the monetary authority formally sets a new fixed rate with respect to a foreign reference currency. Devaluation causes a country's exports to become less expensive, making them more competitive in the global market. This, in turn, means that imports are more expensive, making domestic consumers less likely to purchase them.
[19] 'Residex' is associated with -
A.
Share prices
B.
Price inflation
C.
Mutual fund prices
D.
Land prices
Ans:
Land prices
Explanation :
The RESIDEX was first launched in 2007 by the National Housing Bank (NHB) to provide an index of residential prices in India across cities and over time. It is the first housing price index in India. It was launched in order to fill price information gap and to streamline the process of development of property in various cities across the country.
[20] Which one of the following is not a function of the central bank in an economy?
A.
Dealing with foreign exchange
B.
Controlling monetary policy
C.
Controlling government spending
D.
Acting as a banker's bank
Ans:
Controlling government spending
Explanation :
A central bank, reserve bank, or monetary authority is a public institution that manages a state’s currency, money supply, and interest rates. Central banks also usually oversee the commercial banking system of their respective countries.
[21] In a period of inflation and price rises the supply of money remains -
A.
the same
B.
increases
C.
decreases
D.
increases or decreases pro-portionately.
Ans:
increases
Explanation :
Money supply is the total amount of monetary assets available in an economy at a specific time. The relation between money and prices is historically associated with the quantity theory of money. There is strong empirical evidence of a direct relation between long-term price inflation and money-supply growth, at least for rapid increases in the amount of money in the economy.
[22] Which of the following groups suffer the most from inflation?
A.
Debtros
B.
Creditors
C.
Business class
D.
Holders of real assets
Ans:
Creditors
Explanation :
Inflation, or the general rise of price levels in an economy, has many deleterious effects. It leaves the economy as a whole poorer relative to pre-inflation levels of wealth (individual and societal). Inflation reduces the value of each unit of currency and thus leaves the holder of that currency with lower purchasing power. Generally speaking, those who benefit from higher inflation are debtors and those who suffer from it- creditors. If one has substantial debt, each dollar one has to repay would be worth less than when it was borrowed.
[23] What is "narrow money"?
A.
The sum of currency in circulation and the demand deposits in banks
B.
The sum of MI money and the time deposits
C.
The sum of currency in circulation with the public and the cash reserves held by banks
D.
The market value of the stocks held by all the holders excluding the promoters
Ans:
The sum of currency in circulation and the demand deposits in banks
Explanation :
The four main monetary aggregates of measures of money supply which reflect the state of the monetary sector are:- (i) M1 (Narrow money)= Currency with the public + demand deposits of the public: (ii) M2 = M1 + Post Office Savings deposits: (iii) M3 (Broad money)= M1 + time deposits of the public with banks: and (iv) M4 = M3 + Total post office deposits. So 'Narrow Money' is simply a category of money supply that includes all physical money like coins and currency along with demand deposits and other liquid assets held by the central bank. This category of money is considered to be the most readily available for transactions and commerce.
[24] How the interest-level of a country is affected by FDI?
A.
increases
B.
decreases
C.
remains unaffected
D.
there is increase or decrease
Ans:
decreases
Explanation :
A higher international interest rate will decrease FDI since it means a higher cost of fund in international market, and vice versa. Interest rate is a measure of the cost of capital. A higher interest rate implies more costly investment and, therefore, the higher the interest rate, the more it is likely to defer FDI and the relationship between FDI and the interest rate is expected to be negative. Love and Lage-Hidalgo (2000) and Erdal and Tatoglu (22002), amongst others, find that an increase in the interest rate leads to a decrease in FDI. Interest rate and FDI can both be the cause and effect of other.
[25] If people's income of a country is denoted in a curved line space that it has increased, then what does it denote?
A.
the income is increasing
B.
the income is decreasing
C.
dissimilarity is decreasing in income distribution
D.
dissimilarity in income distribution is increasing
Ans:
dissimilarity is decreasing in income distribution
Explanation :
It shows inequality in income distribution. Inequality indices can also be derived directly from the Lorenz curve. Perhaps the most commonly-used inequality index is the Gini coefficient, which ranges from 0 (perfect equality) to 1 (perfect inequality). It is the ratio of the area enclosed by the Lorenz curve and the perfect equality line to the total area below that line.
Explanation :
Capital formation refers to capital accumulation, referring to the total "stock of capital" that has been formed, or to the growth of this total capital stock. It also refers to a measure of the net additions to the (physical) capital stock of a country (or an economic sector) in an accounting interval, or, a measure of the amount by which the total physical capital stock increased during an accounting period.
[16] If the tax rate increases with the higher level of income, it shall be called -
A.
Proportional tax
B.
Progressive tax
C.
Lump sum tax
D.
Regressive tax
Ans:
Progressive tax
Explanation :
A progressive tax is a tax by which the tax rate increases as the taxable base amount increases." Progressive" describes a distribution effect on income or expenditure, referring to the way the rate progresses from low to high, where the average tax rate is less than the marginal tax rate. It can be applied to individual taxes or to a tax system as a whole; a year, multi-year, or lifetime. Progressive taxes attempt to reduce the tax incidence of people with a lower ability-to-pay, as they shift the incidence increasingly to those with a higher ability-to-pay.
[17] New capital issue is placed in -
A.
Secondary market
B.
Grey market
C.
Primary market
D.
Black market
Ans:
Primary market
Explanation :
The primary market is that part of the capital markets that deals with the issuance of new securities. Companies, governments or public sector institutions can obtain funding through the sale of a new stock or bond issue. This is the market for new long term equity capital. The primary market is the market where the securities are sold for the first time. Therefore it is also called the new issue market (NIM).
[18] If a country devalues its currency, its -
A.
Exports become cheaper and imports become costlier
B.
Exports become costlier and imports become cheaper.
C.
Exports value is equivalent to imports value
D.
No effect on exports and imports
Ans:
Exports become cheaper and imports become costlier
Explanation :
Devaluation means official lowering of the value of a country's currency within a fixed exchange rate system, by which the monetary authority formally sets a new fixed rate with respect to a foreign reference currency. Devaluation causes a country's exports to become less expensive, making them more competitive in the global market. This, in turn, means that imports are more expensive, making domestic consumers less likely to purchase them.
[19] 'Residex' is associated with -
A.
Share prices
B.
Price inflation
C.
Mutual fund prices
D.
Land prices
Ans:
Land prices
Explanation :
The RESIDEX was first launched in 2007 by the National Housing Bank (NHB) to provide an index of residential prices in India across cities and over time. It is the first housing price index in India. It was launched in order to fill price information gap and to streamline the process of development of property in various cities across the country.
[20] Which one of the following is not a function of the central bank in an economy?
A.
Dealing with foreign exchange
B.
Controlling monetary policy
C.
Controlling government spending
D.
Acting as a banker's bank
Ans:
Controlling government spending
Explanation :
A central bank, reserve bank, or monetary authority is a public institution that manages a state’s currency, money supply, and interest rates. Central banks also usually oversee the commercial banking system of their respective countries.
[21] In a period of inflation and price rises the supply of money remains -
A.
the same
B.
increases
C.
decreases
D.
increases or decreases pro-portionately.
Ans:
increases
Explanation :
Money supply is the total amount of monetary assets available in an economy at a specific time. The relation between money and prices is historically associated with the quantity theory of money. There is strong empirical evidence of a direct relation between long-term price inflation and money-supply growth, at least for rapid increases in the amount of money in the economy.
[22] Which of the following groups suffer the most from inflation?
A.
Debtros
B.
Creditors
C.
Business class
D.
Holders of real assets
Ans:
Creditors
Explanation :
Inflation, or the general rise of price levels in an economy, has many deleterious effects. It leaves the economy as a whole poorer relative to pre-inflation levels of wealth (individual and societal). Inflation reduces the value of each unit of currency and thus leaves the holder of that currency with lower purchasing power. Generally speaking, those who benefit from higher inflation are debtors and those who suffer from it- creditors. If one has substantial debt, each dollar one has to repay would be worth less than when it was borrowed.
[23] What is "narrow money"?
A.
The sum of currency in circulation and the demand deposits in banks
B.
The sum of MI money and the time deposits
C.
The sum of currency in circulation with the public and the cash reserves held by banks
D.
The market value of the stocks held by all the holders excluding the promoters
Ans:
The sum of currency in circulation and the demand deposits in banks
Explanation :
The four main monetary aggregates of measures of money supply which reflect the state of the monetary sector are:- (i) M1 (Narrow money)= Currency with the public + demand deposits of the public: (ii) M2 = M1 + Post Office Savings deposits: (iii) M3 (Broad money)= M1 + time deposits of the public with banks: and (iv) M4 = M3 + Total post office deposits. So 'Narrow Money' is simply a category of money supply that includes all physical money like coins and currency along with demand deposits and other liquid assets held by the central bank. This category of money is considered to be the most readily available for transactions and commerce.
[24] How the interest-level of a country is affected by FDI?
A.
increases
B.
decreases
C.
remains unaffected
D.
there is increase or decrease
Ans:
decreases
Explanation :
A higher international interest rate will decrease FDI since it means a higher cost of fund in international market, and vice versa. Interest rate is a measure of the cost of capital. A higher interest rate implies more costly investment and, therefore, the higher the interest rate, the more it is likely to defer FDI and the relationship between FDI and the interest rate is expected to be negative. Love and Lage-Hidalgo (2000) and Erdal and Tatoglu (22002), amongst others, find that an increase in the interest rate leads to a decrease in FDI. Interest rate and FDI can both be the cause and effect of other.
[25] If people's income of a country is denoted in a curved line space that it has increased, then what does it denote?
A.
the income is increasing
B.
the income is decreasing
C.
dissimilarity is decreasing in income distribution
D.
dissimilarity in income distribution is increasing
Ans:
dissimilarity is decreasing in income distribution
Explanation :
It shows inequality in income distribution. Inequality indices can also be derived directly from the Lorenz curve. Perhaps the most commonly-used inequality index is the Gini coefficient, which ranges from 0 (perfect equality) to 1 (perfect inequality). It is the ratio of the area enclosed by the Lorenz curve and the perfect equality line to the total area below that line.
Explanation :
The primary market is that part of the capital markets that deals with the issuance of new securities. Companies, governments or public sector institutions can obtain funding through the sale of a new stock or bond issue. This is the market for new long term equity capital. The primary market is the market where the securities are sold for the first time. Therefore it is also called the new issue market (NIM).
[18] If a country devalues its currency, its -
A.
Exports become cheaper and imports become costlier
B.
Exports become costlier and imports become cheaper.
C.
Exports value is equivalent to imports value
D.
No effect on exports and imports
Ans:
Exports become cheaper and imports become costlier
Explanation :
Devaluation means official lowering of the value of a country's currency within a fixed exchange rate system, by which the monetary authority formally sets a new fixed rate with respect to a foreign reference currency. Devaluation causes a country's exports to become less expensive, making them more competitive in the global market. This, in turn, means that imports are more expensive, making domestic consumers less likely to purchase them.
[19] 'Residex' is associated with -
A.
Share prices
B.
Price inflation
C.
Mutual fund prices
D.
Land prices
Ans:
Land prices
Explanation :
The RESIDEX was first launched in 2007 by the National Housing Bank (NHB) to provide an index of residential prices in India across cities and over time. It is the first housing price index in India. It was launched in order to fill price information gap and to streamline the process of development of property in various cities across the country.
[20] Which one of the following is not a function of the central bank in an economy?
A.
Dealing with foreign exchange
B.
Controlling monetary policy
C.
Controlling government spending
D.
Acting as a banker's bank
Ans:
Controlling government spending
Explanation :
A central bank, reserve bank, or monetary authority is a public institution that manages a state’s currency, money supply, and interest rates. Central banks also usually oversee the commercial banking system of their respective countries.
[21] In a period of inflation and price rises the supply of money remains -
A.
the same
B.
increases
C.
decreases
D.
increases or decreases pro-portionately.
Ans:
increases
Explanation :
Money supply is the total amount of monetary assets available in an economy at a specific time. The relation between money and prices is historically associated with the quantity theory of money. There is strong empirical evidence of a direct relation between long-term price inflation and money-supply growth, at least for rapid increases in the amount of money in the economy.
[22] Which of the following groups suffer the most from inflation?
A.
Debtros
B.
Creditors
C.
Business class
D.
Holders of real assets
Ans:
Creditors
Explanation :
Inflation, or the general rise of price levels in an economy, has many deleterious effects. It leaves the economy as a whole poorer relative to pre-inflation levels of wealth (individual and societal). Inflation reduces the value of each unit of currency and thus leaves the holder of that currency with lower purchasing power. Generally speaking, those who benefit from higher inflation are debtors and those who suffer from it- creditors. If one has substantial debt, each dollar one has to repay would be worth less than when it was borrowed.
[23] What is "narrow money"?
A.
The sum of currency in circulation and the demand deposits in banks
B.
The sum of MI money and the time deposits
C.
The sum of currency in circulation with the public and the cash reserves held by banks
D.
The market value of the stocks held by all the holders excluding the promoters
Ans:
The sum of currency in circulation and the demand deposits in banks
Explanation :
The four main monetary aggregates of measures of money supply which reflect the state of the monetary sector are:- (i) M1 (Narrow money)= Currency with the public + demand deposits of the public: (ii) M2 = M1 + Post Office Savings deposits: (iii) M3 (Broad money)= M1 + time deposits of the public with banks: and (iv) M4 = M3 + Total post office deposits. So 'Narrow Money' is simply a category of money supply that includes all physical money like coins and currency along with demand deposits and other liquid assets held by the central bank. This category of money is considered to be the most readily available for transactions and commerce.
[24] How the interest-level of a country is affected by FDI?
A.
increases
B.
decreases
C.
remains unaffected
D.
there is increase or decrease
Ans:
decreases
Explanation :
A higher international interest rate will decrease FDI since it means a higher cost of fund in international market, and vice versa. Interest rate is a measure of the cost of capital. A higher interest rate implies more costly investment and, therefore, the higher the interest rate, the more it is likely to defer FDI and the relationship between FDI and the interest rate is expected to be negative. Love and Lage-Hidalgo (2000) and Erdal and Tatoglu (22002), amongst others, find that an increase in the interest rate leads to a decrease in FDI. Interest rate and FDI can both be the cause and effect of other.
[25] If people's income of a country is denoted in a curved line space that it has increased, then what does it denote?
A.
the income is increasing
B.
the income is decreasing
C.
dissimilarity is decreasing in income distribution
D.
dissimilarity in income distribution is increasing
Ans:
dissimilarity is decreasing in income distribution
Explanation :
It shows inequality in income distribution. Inequality indices can also be derived directly from the Lorenz curve. Perhaps the most commonly-used inequality index is the Gini coefficient, which ranges from 0 (perfect equality) to 1 (perfect inequality). It is the ratio of the area enclosed by the Lorenz curve and the perfect equality line to the total area below that line.
Explanation :
The RESIDEX was first launched in 2007 by the National Housing Bank (NHB) to provide an index of residential prices in India across cities and over time. It is the first housing price index in India. It was launched in order to fill price information gap and to streamline the process of development of property in various cities across the country.
[20] Which one of the following is not a function of the central bank in an economy?
A.
Dealing with foreign exchange
B.
Controlling monetary policy
C.
Controlling government spending
D.
Acting as a banker's bank
Ans:
Controlling government spending
Explanation :
A central bank, reserve bank, or monetary authority is a public institution that manages a state’s currency, money supply, and interest rates. Central banks also usually oversee the commercial banking system of their respective countries.
[21] In a period of inflation and price rises the supply of money remains -
A.
the same
B.
increases
C.
decreases
D.
increases or decreases pro-portionately.
Ans:
increases
Explanation :
Money supply is the total amount of monetary assets available in an economy at a specific time. The relation between money and prices is historically associated with the quantity theory of money. There is strong empirical evidence of a direct relation between long-term price inflation and money-supply growth, at least for rapid increases in the amount of money in the economy.
[22] Which of the following groups suffer the most from inflation?
A.
Debtros
B.
Creditors
C.
Business class
D.
Holders of real assets
Ans:
Creditors
Explanation :
Inflation, or the general rise of price levels in an economy, has many deleterious effects. It leaves the economy as a whole poorer relative to pre-inflation levels of wealth (individual and societal). Inflation reduces the value of each unit of currency and thus leaves the holder of that currency with lower purchasing power. Generally speaking, those who benefit from higher inflation are debtors and those who suffer from it- creditors. If one has substantial debt, each dollar one has to repay would be worth less than when it was borrowed.
[23] What is "narrow money"?
A.
The sum of currency in circulation and the demand deposits in banks
B.
The sum of MI money and the time deposits
C.
The sum of currency in circulation with the public and the cash reserves held by banks
D.
The market value of the stocks held by all the holders excluding the promoters
Ans:
The sum of currency in circulation and the demand deposits in banks
Explanation :
The four main monetary aggregates of measures of money supply which reflect the state of the monetary sector are:- (i) M1 (Narrow money)= Currency with the public + demand deposits of the public: (ii) M2 = M1 + Post Office Savings deposits: (iii) M3 (Broad money)= M1 + time deposits of the public with banks: and (iv) M4 = M3 + Total post office deposits. So 'Narrow Money' is simply a category of money supply that includes all physical money like coins and currency along with demand deposits and other liquid assets held by the central bank. This category of money is considered to be the most readily available for transactions and commerce.
[24] How the interest-level of a country is affected by FDI?
A.
increases
B.
decreases
C.
remains unaffected
D.
there is increase or decrease
Ans:
decreases
Explanation :
A higher international interest rate will decrease FDI since it means a higher cost of fund in international market, and vice versa. Interest rate is a measure of the cost of capital. A higher interest rate implies more costly investment and, therefore, the higher the interest rate, the more it is likely to defer FDI and the relationship between FDI and the interest rate is expected to be negative. Love and Lage-Hidalgo (2000) and Erdal and Tatoglu (22002), amongst others, find that an increase in the interest rate leads to a decrease in FDI. Interest rate and FDI can both be the cause and effect of other.
[25] If people's income of a country is denoted in a curved line space that it has increased, then what does it denote?
A.
the income is increasing
B.
the income is decreasing
C.
dissimilarity is decreasing in income distribution
D.
dissimilarity in income distribution is increasing
Ans:
dissimilarity is decreasing in income distribution
Explanation :
It shows inequality in income distribution. Inequality indices can also be derived directly from the Lorenz curve. Perhaps the most commonly-used inequality index is the Gini coefficient, which ranges from 0 (perfect equality) to 1 (perfect inequality). It is the ratio of the area enclosed by the Lorenz curve and the perfect equality line to the total area below that line.
Explanation :
Money supply is the total amount of monetary assets available in an economy at a specific time. The relation between money and prices is historically associated with the quantity theory of money. There is strong empirical evidence of a direct relation between long-term price inflation and money-supply growth, at least for rapid increases in the amount of money in the economy.
[22] Which of the following groups suffer the most from inflation?
A.
Debtros
B.
Creditors
C.
Business class
D.
Holders of real assets
Ans:
Creditors
Explanation :
Inflation, or the general rise of price levels in an economy, has many deleterious effects. It leaves the economy as a whole poorer relative to pre-inflation levels of wealth (individual and societal). Inflation reduces the value of each unit of currency and thus leaves the holder of that currency with lower purchasing power. Generally speaking, those who benefit from higher inflation are debtors and those who suffer from it- creditors. If one has substantial debt, each dollar one has to repay would be worth less than when it was borrowed.
[23] What is "narrow money"?
A.
The sum of currency in circulation and the demand deposits in banks
B.
The sum of MI money and the time deposits
C.
The sum of currency in circulation with the public and the cash reserves held by banks
D.
The market value of the stocks held by all the holders excluding the promoters
Ans:
The sum of currency in circulation and the demand deposits in banks
Explanation :
The four main monetary aggregates of measures of money supply which reflect the state of the monetary sector are:- (i) M1 (Narrow money)= Currency with the public + demand deposits of the public: (ii) M2 = M1 + Post Office Savings deposits: (iii) M3 (Broad money)= M1 + time deposits of the public with banks: and (iv) M4 = M3 + Total post office deposits. So 'Narrow Money' is simply a category of money supply that includes all physical money like coins and currency along with demand deposits and other liquid assets held by the central bank. This category of money is considered to be the most readily available for transactions and commerce.
[24] How the interest-level of a country is affected by FDI?
A.
increases
B.
decreases
C.
remains unaffected
D.
there is increase or decrease
Ans:
decreases
Explanation :
A higher international interest rate will decrease FDI since it means a higher cost of fund in international market, and vice versa. Interest rate is a measure of the cost of capital. A higher interest rate implies more costly investment and, therefore, the higher the interest rate, the more it is likely to defer FDI and the relationship between FDI and the interest rate is expected to be negative. Love and Lage-Hidalgo (2000) and Erdal and Tatoglu (22002), amongst others, find that an increase in the interest rate leads to a decrease in FDI. Interest rate and FDI can both be the cause and effect of other.
[25] If people's income of a country is denoted in a curved line space that it has increased, then what does it denote?
A.
the income is increasing
B.
the income is decreasing
C.
dissimilarity is decreasing in income distribution
D.
dissimilarity in income distribution is increasing
Ans:
dissimilarity is decreasing in income distribution
Explanation :
It shows inequality in income distribution. Inequality indices can also be derived directly from the Lorenz curve. Perhaps the most commonly-used inequality index is the Gini coefficient, which ranges from 0 (perfect equality) to 1 (perfect inequality). It is the ratio of the area enclosed by the Lorenz curve and the perfect equality line to the total area below that line.
Explanation :
The four main monetary aggregates of measures of money supply which reflect the state of the monetary sector are:- (i) M1 (Narrow money)= Currency with the public + demand deposits of the public: (ii) M2 = M1 + Post Office Savings deposits: (iii) M3 (Broad money)= M1 + time deposits of the public with banks: and (iv) M4 = M3 + Total post office deposits. So 'Narrow Money' is simply a category of money supply that includes all physical money like coins and currency along with demand deposits and other liquid assets held by the central bank. This category of money is considered to be the most readily available for transactions and commerce.
[24] How the interest-level of a country is affected by FDI?
A.
increases
B.
decreases
C.
remains unaffected
D.
there is increase or decrease
Ans:
decreases
Explanation :
A higher international interest rate will decrease FDI since it means a higher cost of fund in international market, and vice versa. Interest rate is a measure of the cost of capital. A higher interest rate implies more costly investment and, therefore, the higher the interest rate, the more it is likely to defer FDI and the relationship between FDI and the interest rate is expected to be negative. Love and Lage-Hidalgo (2000) and Erdal and Tatoglu (22002), amongst others, find that an increase in the interest rate leads to a decrease in FDI. Interest rate and FDI can both be the cause and effect of other.
[25] If people's income of a country is denoted in a curved line space that it has increased, then what does it denote?
A.
the income is increasing
B.
the income is decreasing
C.
dissimilarity is decreasing in income distribution
D.
dissimilarity in income distribution is increasing
Ans:
dissimilarity is decreasing in income distribution
Explanation :
It shows inequality in income distribution. Inequality indices can also be derived directly from the Lorenz curve. Perhaps the most commonly-used inequality index is the Gini coefficient, which ranges from 0 (perfect equality) to 1 (perfect inequality). It is the ratio of the area enclosed by the Lorenz curve and the perfect equality line to the total area below that line.
Explanation :
It shows inequality in income distribution. Inequality indices can also be derived directly from the Lorenz curve. Perhaps the most commonly-used inequality index is the Gini coefficient, which ranges from 0 (perfect equality) to 1 (perfect inequality). It is the ratio of the area enclosed by the Lorenz curve and the perfect equality line to the total area below that line.