[1] Which of the following curve describes the variation of household expenditure on a particular good with respect to household income?
A.
Demand curve
B.
Engel curve
C.
Great Cats by curve
D.
Cost curve
Ans:
Engel curve
Explanation :
In microeconomics, an Engel curve describes how household expenditure on a particular good or service varies with household income. The curve is named after the German statistician Ernst Engel (1821-1896). Who was the first to investigate this relationship between goods expenditure and income systematically in 1857.
[2] Malthusian theory is associated with which of the following?
A.
Poverty
B.
Employment
C.
Diseases
D.
Population
Ans:
Population
Explanation :
The most well-known theory of population is the Malthusian theory. lt explains the relationship between the growth in food supply and in population. It states that population increases faster than food supply and if unchecked leads to vice or misery. Thomas Robert Malthus enunciated his views about population in his famous book, Essay on the Principle of Population as it affects the Future Improvement of Society, published in 1798.
[3] Which of the following relations always holds true?
A.
Income = Consumption + Investment
B.
Income = Consumption + Saving
C.
Saving = Investment
D.
Income = Consumption + Saving + Investment
Ans:
Income = Consumption + Saving
Explanation :
Consumers do one of two things with their disposable income: They save it or they spend it. So Income #NAME?
[4] The Keynesian consumption function shows a relation between -
A.
aggregate consumption and total population.
B.
aggregate consumption and general price level.
C.
aggregate consumption and aggregate income
D.
aggregate consumption and interest rate
Ans:
aggregate consumption and aggregate income
Explanation :
According to Keynesian Theory of consumption, the current real disposable income is the most important determinant of consumption in the short run. It bases consumption on current income.
[5] Full employment is a situation where -
A.
there is no involuntary unemployment
B.
there is involuntary unemployment
C.
there is no voluntary unemployment
D.
there is voluntary unemployment
Ans:
there is involuntary unemployment
Explanation :
Full employment refers to a situation in which every able bodied person who is willing to work at the prevailing rate of wages is, in fact, employed. It implies absence of involuntary unemployment which occurs when those who are willing to work at the going wage rate do not get work.
[6] What is needed for creating demand?
A.
Production
B.
Price
C.
Income
D.
Import
Ans:
Production
Explanation :
Demand refers to how much (quantity) of a product or service is desired by buyers. The quantity demanded is the amount of a product people are willing to buy at a certain price; the relationship between price and quantity demanded is known as the demand relationship. So for demand to originate, a product is required first.
[7] Which of the statements is Correct About India's national income?
A.
Percentage share of agriculture is higher than services
B.
Percentage share of industry is higher than agriculture
C.
Percentage share of services is higher than industry
D.
Percentage share of services is higher than agriculture and industry put together
Ans:
Percentage share of services is higher than agriculture and industry put together
Explanation :
The services sector has the largest share in the GDP, accounting for 55% in 2007, up from 15% in 1950. Industry accounts for 28% of the GDP and employ 14% of the total workforce. Agriculture and allied sectors like forestry, logging and fishing ac-counted for 15.7% of the GDP in 2009-10.
[8] Who among the following is not a classical economist?
A.
David Ricardo
B.
John Stuart Mill
C.
Thomas Malthus
D.
John Maynard Keynes
Ans:
John Maynard Keynes
Explanation :
Classical economics is widely regarded as the first modern school of economic thought. Its major developers include Adam Smith, Jean-Baptiste Say, David Ricardo, Thomas Malthus and John Stuart Mill. John Maynard Keynes was a British economist whose ideas have profoundly affected the theory and practice of modern macroeconomics and formed the economic policies of governments.
[9] The difference in the value of visible exports and visible imports is called :
A.
Balance Sheet of items
B.
Balance of Payments
C.
Balance of Trade
D.
Balance of Account
Ans:
Balance of Trade
Explanation :
Balance of Trade refers to the difference between the value of a country's visible imports and visible exports. Also known as the visible balance, it forms part of the balance of payments current account. When the value of visible imports totals more than the value of visible exports, it is known as an adverse balance of trade.
[10] Which of the following best indicates economic growth of a Nation?
A.
Agriculture income
B.
Per capita income
C.
Gross industrial production
D.
Inflation
Ans:
Per capita income
Explanation :
Some economists believe that economic growth is meaningless if it is not distributed across different segments of population. So per capita income is considered by some as a better indicator of economic growth since it measures the average income earned per person in country in a specified year. It serves as an indicator of a country's living standards and how wealth or income is distributed across the population. However, to a vast majority Gross Domestic Product (GDP) is the most comprehensive measure of over-all economic performance.
[11] Indirect taxes by nature are -
A.
degressive
B.
regressive
C.
progressive
D.
proportional
Ans:
regressive
Explanation :
An indirect tax is one in which the burden can be shifted to others. The tax payer is not the tax bearer. The impact and incidence of indirect taxes are on different persons. Since, most of the indirect taxes are not progressive in nature, individuals may not mind to pay them, In other words, indirect taxes are generally regressive in nature. Therefore, individuals would not be de-motivated to work and to save, which may increase investment.
[12] Taxation is a tool of -
A.
Monetary-policy
B.
Fiscal policy
C.
Price policy
D.
Wage policy
Ans:
Fiscal policy
Explanation :
In economics, fiscal policy is the use of government revenue collection (taxation) and expenditure (spending) to influence the economy. The two main instruments of fiscal policy are government taxation and expenditure.
[13] Which of the following is not viewed as national debt?
A.
Life Insurance Policies
B.
Long-term Government Bonds
C.
National Savings Certificates
D.
Provident Fund
Ans:
Life Insurance Policies
Explanation :
Government debt (also known as public debt, national debt) is the debt owed by a central government. Government debt is one method of financing government operations, but it is not the only method. Governments can also create money to monetize their debts, thereby removing the need to pay interest. But this practice simply reduces government interest costs rather than truly canceling government debt. Governments usually borrow by issuing securities, government bonds and bills. Less creditworthy countries sometimes borrow directly from a supranational organization (e.g. the World Bank) or international financial institutions.
[14] What is Value Added Tax (VAT)?
A.
A simple, transparent, easy to pay tax imposed on consumers
B.
A new initiative taken by the Government to increase the tax-burden of high income groups
C.
A single tax that replaces State taxes like, surcharge, turnover tax, etc.
D.
A new tax to be imposed on the producers of capital goods
Ans:
A single tax that replaces State taxes like, surcharge, turnover tax, etc.
Explanation :
A value added tax (VAT) is a form of consumption tax. A VAT is like a sales tax in that ultimately only the end consumer is taxed. It differs from the sales tax in that, with the latter, the tax is collected and remitted to the government only once, at the point of purchase by the end consumer. VAT comes under the single tax system based primarily or exclusively on one tax, typically chosen for its special properties.
[15] What is referred to as 'Depository Services'?
A.
A new scheme of fixed deposits
B.
A method for regulating stock exchanges
C.
An agency for safe-keeping of securities
D.
An advisory service to investors
Ans:
An agency for safe-keeping of securities
Explanation :
It is a service offered by a securities depository under which the depository maintains book accounts recording the ownership of securities held on behalf of the depository's participants, for eligible securities.
[16] The terms 'Bull' and 'Bear' are associated with -
A.
Banking
B.
Foreign Trade
C.
Stock Market
D.
Internet Trade
Ans:
Stock Market
Explanation :
The terms 'bull' and 'bear' describe upward and downward trends respectively of the stock market. A bear market refers to a decline in prices, usually for a period of a few months, in a single security or asset, group of securities or the securities market as a whole. A bull market is when prices are rising.
[17] A currency whose exchange rate is influenced by the government is a/an -
A.
Unmanaged Currency
B.
Managed Currency
C.
Scarce Currency
D.
Surplus Currency
Ans:
Managed Currency
Explanation :
Managed currency refers to currency whose ex-change rate is not determined by the free-market forces of demand and supply but instead by the government's intervention through the country's central bank.
[18] Which one of the following statements is correct?
A.
Good money drives bad money out of circulation
B.
Bad money drives good money out of circulation
C.
Good and bad money cannot circulate together
D.
Cannot say
Ans:
Bad money drives good money out of circulation
Explanation :
One of the most famous axioms in economics is "bad money drives out good." This rule has generally been attributed to Sir Thomas Gresham (1519-1579), an English financier who advised King Edward VI and Queen Elizabeth I with regard to financial matters, and it is popularly known as Gresham's Law. The key prerequisite is that there must be two forms of money or currency (with the same face value) in circulation simultaneously.
[19] Devaluation of currency leads to -
A.
expansion of export trade
B.
contraction of import trade
C.
expansion of import substitution
D.
All of the above
Ans:
All of the above
Explanation :
Devaluation in modern monetary policy is a reduction in the value of a currency with respect to those goods, services or other monetary units with which that currency can be exchanged. There are two implications for currency devaluation. First, de-valuation makes a country's exports relatively less expensive for foreigners and second, it makes foreign products relatively more expensive for domestic consumers, discouraging imports. As a result, this may help to reduce a country's trade deficit. Import substitution means promotion of export to replace imports. It is also fallout of devaluation.
[20] As a result of higher rate of inflation in India, the U.S. dollar will -
A.
Depreciate
B.
Constant
C.
Negligible
D.
Appreciate
Ans:
Appreciate
Explanation :
A relatively higher rate of inflation causing rise in prices of the goods in India as compared to those in the USA will make US goods relatively cheaper and the Indian goods expensive. This will lead to rise in imports of US goods into India and the reduction in Indian exports to the USA that will, in turn, cause the foreign exchange rate of dollar in terms of rupees to rise and the price of Indian rupee in terms of dollar will fall. Thus, as a result of higher rate of inflation in India, the US dollar -will appreciate and the Indian rupee will depreciate.
[21] Which type of foreign investment is considered as unsafe?
A.
Foreign Direct Investment (FDI)
B.
Portfolio Investment
C.
NRI deposits
D.
External commercial borrowing
Ans:
Portfolio Investment
Explanation :
Portfolio Investments are considered unsafe. These are investments in the form of a group (portfolio) of assets, including transactions in equity securities, such as common stock, and debt securities, such as banknotes, bonds, and debentures. Portfolio investments are passive investments, as they do not entail active management or control of the issuing company. Rather, the purpose of the investment is solely financial gain, in contrast to foreign direct investment (FDI), which allows an investor to exercise a certain degree of managerial control over a company.
[22] 'Mixed economy' refers to -
A.
The co-existence of heavy, small scale and cottage industries
B.
The promotion of agriculture as well as cottage industries
C.
The co-existence of rich as well as poor
D.
The co-existence of public as well as private sector
Ans:
the co-existence of public as well as private sector
Explanation :
Mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies.
[23] Golden Handshake Scheme is associated with -
A.
Inviting foreign companies
B.
Private investment in public enterprises
C.
Establishing joint enterprises
D.
Voluntary retirement
Ans:
Voluntary retirement
Explanation :
A golden handshake is a clause in an executive employment contract that provides the executive with a significant severance package in the case that the executive loses his or her job through firing, restructuring, or even scheduled retirement. This can be in the form of cash, equity, and other benefits, and is often accompanied by an accelerated vesting of stock options.
[24] Stagflation is a situation of -
A.
stagnation and deflation
B.
stagnation and recession
C.
stagnation and inflation
D.
stagnation and recovery
Ans:
stagnation and inflation
Explanation :
Stagflation is a situation of stagnation in which the inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high. Stagflation occurs when the economy isn't growing but prices are, which is not a good situation for a country to be in
[25] Devaluation makes import -
A.
Competitive
B.
Inelastic
C.
Cheaper
D.
Dearer
Ans:
Dearer
Explanation :
Devaluation makes import expensive and discourages it, while the export of a country that devalues becomes cheaper and thereby induces trade partners to import more goods from her. Nations that produce industrial goods on a large scale stand to benefit from devaluation.
Explanation :
In microeconomics, an Engel curve describes how household expenditure on a particular good or service varies with household income. The curve is named after the German statistician Ernst Engel (1821-1896). Who was the first to investigate this relationship between goods expenditure and income systematically in 1857.
[2] Malthusian theory is associated with which of the following?
A.
Poverty
B.
Employment
C.
Diseases
D.
Population
Ans:
Population
Explanation :
The most well-known theory of population is the Malthusian theory. lt explains the relationship between the growth in food supply and in population. It states that population increases faster than food supply and if unchecked leads to vice or misery. Thomas Robert Malthus enunciated his views about population in his famous book, Essay on the Principle of Population as it affects the Future Improvement of Society, published in 1798.
[3] Which of the following relations always holds true?
A.
Income = Consumption + Investment
B.
Income = Consumption + Saving
C.
Saving = Investment
D.
Income = Consumption + Saving + Investment
Ans:
Income = Consumption + Saving
Explanation :
Consumers do one of two things with their disposable income: They save it or they spend it. So Income #NAME?
[4] The Keynesian consumption function shows a relation between -
A.
aggregate consumption and total population.
B.
aggregate consumption and general price level.
C.
aggregate consumption and aggregate income
D.
aggregate consumption and interest rate
Ans:
aggregate consumption and aggregate income
Explanation :
According to Keynesian Theory of consumption, the current real disposable income is the most important determinant of consumption in the short run. It bases consumption on current income.
[5] Full employment is a situation where -
A.
there is no involuntary unemployment
B.
there is involuntary unemployment
C.
there is no voluntary unemployment
D.
there is voluntary unemployment
Ans:
there is involuntary unemployment
Explanation :
Full employment refers to a situation in which every able bodied person who is willing to work at the prevailing rate of wages is, in fact, employed. It implies absence of involuntary unemployment which occurs when those who are willing to work at the going wage rate do not get work.
[6] What is needed for creating demand?
A.
Production
B.
Price
C.
Income
D.
Import
Ans:
Production
Explanation :
Demand refers to how much (quantity) of a product or service is desired by buyers. The quantity demanded is the amount of a product people are willing to buy at a certain price; the relationship between price and quantity demanded is known as the demand relationship. So for demand to originate, a product is required first.
[7] Which of the statements is Correct About India's national income?
A.
Percentage share of agriculture is higher than services
B.
Percentage share of industry is higher than agriculture
C.
Percentage share of services is higher than industry
D.
Percentage share of services is higher than agriculture and industry put together
Ans:
Percentage share of services is higher than agriculture and industry put together
Explanation :
The services sector has the largest share in the GDP, accounting for 55% in 2007, up from 15% in 1950. Industry accounts for 28% of the GDP and employ 14% of the total workforce. Agriculture and allied sectors like forestry, logging and fishing ac-counted for 15.7% of the GDP in 2009-10.
[8] Who among the following is not a classical economist?
A.
David Ricardo
B.
John Stuart Mill
C.
Thomas Malthus
D.
John Maynard Keynes
Ans:
John Maynard Keynes
Explanation :
Classical economics is widely regarded as the first modern school of economic thought. Its major developers include Adam Smith, Jean-Baptiste Say, David Ricardo, Thomas Malthus and John Stuart Mill. John Maynard Keynes was a British economist whose ideas have profoundly affected the theory and practice of modern macroeconomics and formed the economic policies of governments.
[9] The difference in the value of visible exports and visible imports is called :
A.
Balance Sheet of items
B.
Balance of Payments
C.
Balance of Trade
D.
Balance of Account
Ans:
Balance of Trade
Explanation :
Balance of Trade refers to the difference between the value of a country's visible imports and visible exports. Also known as the visible balance, it forms part of the balance of payments current account. When the value of visible imports totals more than the value of visible exports, it is known as an adverse balance of trade.
[10] Which of the following best indicates economic growth of a Nation?
A.
Agriculture income
B.
Per capita income
C.
Gross industrial production
D.
Inflation
Ans:
Per capita income
Explanation :
Some economists believe that economic growth is meaningless if it is not distributed across different segments of population. So per capita income is considered by some as a better indicator of economic growth since it measures the average income earned per person in country in a specified year. It serves as an indicator of a country's living standards and how wealth or income is distributed across the population. However, to a vast majority Gross Domestic Product (GDP) is the most comprehensive measure of over-all economic performance.
[11] Indirect taxes by nature are -
A.
degressive
B.
regressive
C.
progressive
D.
proportional
Ans:
regressive
Explanation :
An indirect tax is one in which the burden can be shifted to others. The tax payer is not the tax bearer. The impact and incidence of indirect taxes are on different persons. Since, most of the indirect taxes are not progressive in nature, individuals may not mind to pay them, In other words, indirect taxes are generally regressive in nature. Therefore, individuals would not be de-motivated to work and to save, which may increase investment.
[12] Taxation is a tool of -
A.
Monetary-policy
B.
Fiscal policy
C.
Price policy
D.
Wage policy
Ans:
Fiscal policy
Explanation :
In economics, fiscal policy is the use of government revenue collection (taxation) and expenditure (spending) to influence the economy. The two main instruments of fiscal policy are government taxation and expenditure.
[13] Which of the following is not viewed as national debt?
A.
Life Insurance Policies
B.
Long-term Government Bonds
C.
National Savings Certificates
D.
Provident Fund
Ans:
Life Insurance Policies
Explanation :
Government debt (also known as public debt, national debt) is the debt owed by a central government. Government debt is one method of financing government operations, but it is not the only method. Governments can also create money to monetize their debts, thereby removing the need to pay interest. But this practice simply reduces government interest costs rather than truly canceling government debt. Governments usually borrow by issuing securities, government bonds and bills. Less creditworthy countries sometimes borrow directly from a supranational organization (e.g. the World Bank) or international financial institutions.
[14] What is Value Added Tax (VAT)?
A.
A simple, transparent, easy to pay tax imposed on consumers
B.
A new initiative taken by the Government to increase the tax-burden of high income groups
C.
A single tax that replaces State taxes like, surcharge, turnover tax, etc.
D.
A new tax to be imposed on the producers of capital goods
Ans:
A single tax that replaces State taxes like, surcharge, turnover tax, etc.
Explanation :
A value added tax (VAT) is a form of consumption tax. A VAT is like a sales tax in that ultimately only the end consumer is taxed. It differs from the sales tax in that, with the latter, the tax is collected and remitted to the government only once, at the point of purchase by the end consumer. VAT comes under the single tax system based primarily or exclusively on one tax, typically chosen for its special properties.
[15] What is referred to as 'Depository Services'?
A.
A new scheme of fixed deposits
B.
A method for regulating stock exchanges
C.
An agency for safe-keeping of securities
D.
An advisory service to investors
Ans:
An agency for safe-keeping of securities
Explanation :
It is a service offered by a securities depository under which the depository maintains book accounts recording the ownership of securities held on behalf of the depository's participants, for eligible securities.
[16] The terms 'Bull' and 'Bear' are associated with -
A.
Banking
B.
Foreign Trade
C.
Stock Market
D.
Internet Trade
Ans:
Stock Market
Explanation :
The terms 'bull' and 'bear' describe upward and downward trends respectively of the stock market. A bear market refers to a decline in prices, usually for a period of a few months, in a single security or asset, group of securities or the securities market as a whole. A bull market is when prices are rising.
[17] A currency whose exchange rate is influenced by the government is a/an -
A.
Unmanaged Currency
B.
Managed Currency
C.
Scarce Currency
D.
Surplus Currency
Ans:
Managed Currency
Explanation :
Managed currency refers to currency whose ex-change rate is not determined by the free-market forces of demand and supply but instead by the government's intervention through the country's central bank.
[18] Which one of the following statements is correct?
A.
Good money drives bad money out of circulation
B.
Bad money drives good money out of circulation
C.
Good and bad money cannot circulate together
D.
Cannot say
Ans:
Bad money drives good money out of circulation
Explanation :
One of the most famous axioms in economics is "bad money drives out good." This rule has generally been attributed to Sir Thomas Gresham (1519-1579), an English financier who advised King Edward VI and Queen Elizabeth I with regard to financial matters, and it is popularly known as Gresham's Law. The key prerequisite is that there must be two forms of money or currency (with the same face value) in circulation simultaneously.
[19] Devaluation of currency leads to -
A.
expansion of export trade
B.
contraction of import trade
C.
expansion of import substitution
D.
All of the above
Ans:
All of the above
Explanation :
Devaluation in modern monetary policy is a reduction in the value of a currency with respect to those goods, services or other monetary units with which that currency can be exchanged. There are two implications for currency devaluation. First, de-valuation makes a country's exports relatively less expensive for foreigners and second, it makes foreign products relatively more expensive for domestic consumers, discouraging imports. As a result, this may help to reduce a country's trade deficit. Import substitution means promotion of export to replace imports. It is also fallout of devaluation.
[20] As a result of higher rate of inflation in India, the U.S. dollar will -
A.
Depreciate
B.
Constant
C.
Negligible
D.
Appreciate
Ans:
Appreciate
Explanation :
A relatively higher rate of inflation causing rise in prices of the goods in India as compared to those in the USA will make US goods relatively cheaper and the Indian goods expensive. This will lead to rise in imports of US goods into India and the reduction in Indian exports to the USA that will, in turn, cause the foreign exchange rate of dollar in terms of rupees to rise and the price of Indian rupee in terms of dollar will fall. Thus, as a result of higher rate of inflation in India, the US dollar -will appreciate and the Indian rupee will depreciate.
[21] Which type of foreign investment is considered as unsafe?
A.
Foreign Direct Investment (FDI)
B.
Portfolio Investment
C.
NRI deposits
D.
External commercial borrowing
Ans:
Portfolio Investment
Explanation :
Portfolio Investments are considered unsafe. These are investments in the form of a group (portfolio) of assets, including transactions in equity securities, such as common stock, and debt securities, such as banknotes, bonds, and debentures. Portfolio investments are passive investments, as they do not entail active management or control of the issuing company. Rather, the purpose of the investment is solely financial gain, in contrast to foreign direct investment (FDI), which allows an investor to exercise a certain degree of managerial control over a company.
[22] 'Mixed economy' refers to -
A.
The co-existence of heavy, small scale and cottage industries
B.
The promotion of agriculture as well as cottage industries
C.
The co-existence of rich as well as poor
D.
The co-existence of public as well as private sector
Ans:
the co-existence of public as well as private sector
Explanation :
Mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies.
[23] Golden Handshake Scheme is associated with -
A.
Inviting foreign companies
B.
Private investment in public enterprises
C.
Establishing joint enterprises
D.
Voluntary retirement
Ans:
Voluntary retirement
Explanation :
A golden handshake is a clause in an executive employment contract that provides the executive with a significant severance package in the case that the executive loses his or her job through firing, restructuring, or even scheduled retirement. This can be in the form of cash, equity, and other benefits, and is often accompanied by an accelerated vesting of stock options.
[24] Stagflation is a situation of -
A.
stagnation and deflation
B.
stagnation and recession
C.
stagnation and inflation
D.
stagnation and recovery
Ans:
stagnation and inflation
Explanation :
Stagflation is a situation of stagnation in which the inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high. Stagflation occurs when the economy isn't growing but prices are, which is not a good situation for a country to be in
[25] Devaluation makes import -
A.
Competitive
B.
Inelastic
C.
Cheaper
D.
Dearer
Ans:
Dearer
Explanation :
Devaluation makes import expensive and discourages it, while the export of a country that devalues becomes cheaper and thereby induces trade partners to import more goods from her. Nations that produce industrial goods on a large scale stand to benefit from devaluation.
Explanation :
Consumers do one of two things with their disposable income: They save it or they spend it. So Income #NAME?
[4] The Keynesian consumption function shows a relation between -
A.
aggregate consumption and total population.
B.
aggregate consumption and general price level.
C.
aggregate consumption and aggregate income
D.
aggregate consumption and interest rate
Ans:
aggregate consumption and aggregate income
Explanation :
According to Keynesian Theory of consumption, the current real disposable income is the most important determinant of consumption in the short run. It bases consumption on current income.
[5] Full employment is a situation where -
A.
there is no involuntary unemployment
B.
there is involuntary unemployment
C.
there is no voluntary unemployment
D.
there is voluntary unemployment
Ans:
there is involuntary unemployment
Explanation :
Full employment refers to a situation in which every able bodied person who is willing to work at the prevailing rate of wages is, in fact, employed. It implies absence of involuntary unemployment which occurs when those who are willing to work at the going wage rate do not get work.
[6] What is needed for creating demand?
A.
Production
B.
Price
C.
Income
D.
Import
Ans:
Production
Explanation :
Demand refers to how much (quantity) of a product or service is desired by buyers. The quantity demanded is the amount of a product people are willing to buy at a certain price; the relationship between price and quantity demanded is known as the demand relationship. So for demand to originate, a product is required first.
[7] Which of the statements is Correct About India's national income?
A.
Percentage share of agriculture is higher than services
B.
Percentage share of industry is higher than agriculture
C.
Percentage share of services is higher than industry
D.
Percentage share of services is higher than agriculture and industry put together
Ans:
Percentage share of services is higher than agriculture and industry put together
Explanation :
The services sector has the largest share in the GDP, accounting for 55% in 2007, up from 15% in 1950. Industry accounts for 28% of the GDP and employ 14% of the total workforce. Agriculture and allied sectors like forestry, logging and fishing ac-counted for 15.7% of the GDP in 2009-10.
[8] Who among the following is not a classical economist?
A.
David Ricardo
B.
John Stuart Mill
C.
Thomas Malthus
D.
John Maynard Keynes
Ans:
John Maynard Keynes
Explanation :
Classical economics is widely regarded as the first modern school of economic thought. Its major developers include Adam Smith, Jean-Baptiste Say, David Ricardo, Thomas Malthus and John Stuart Mill. John Maynard Keynes was a British economist whose ideas have profoundly affected the theory and practice of modern macroeconomics and formed the economic policies of governments.
[9] The difference in the value of visible exports and visible imports is called :
A.
Balance Sheet of items
B.
Balance of Payments
C.
Balance of Trade
D.
Balance of Account
Ans:
Balance of Trade
Explanation :
Balance of Trade refers to the difference between the value of a country's visible imports and visible exports. Also known as the visible balance, it forms part of the balance of payments current account. When the value of visible imports totals more than the value of visible exports, it is known as an adverse balance of trade.
[10] Which of the following best indicates economic growth of a Nation?
A.
Agriculture income
B.
Per capita income
C.
Gross industrial production
D.
Inflation
Ans:
Per capita income
Explanation :
Some economists believe that economic growth is meaningless if it is not distributed across different segments of population. So per capita income is considered by some as a better indicator of economic growth since it measures the average income earned per person in country in a specified year. It serves as an indicator of a country's living standards and how wealth or income is distributed across the population. However, to a vast majority Gross Domestic Product (GDP) is the most comprehensive measure of over-all economic performance.
[11] Indirect taxes by nature are -
A.
degressive
B.
regressive
C.
progressive
D.
proportional
Ans:
regressive
Explanation :
An indirect tax is one in which the burden can be shifted to others. The tax payer is not the tax bearer. The impact and incidence of indirect taxes are on different persons. Since, most of the indirect taxes are not progressive in nature, individuals may not mind to pay them, In other words, indirect taxes are generally regressive in nature. Therefore, individuals would not be de-motivated to work and to save, which may increase investment.
[12] Taxation is a tool of -
A.
Monetary-policy
B.
Fiscal policy
C.
Price policy
D.
Wage policy
Ans:
Fiscal policy
Explanation :
In economics, fiscal policy is the use of government revenue collection (taxation) and expenditure (spending) to influence the economy. The two main instruments of fiscal policy are government taxation and expenditure.
[13] Which of the following is not viewed as national debt?
A.
Life Insurance Policies
B.
Long-term Government Bonds
C.
National Savings Certificates
D.
Provident Fund
Ans:
Life Insurance Policies
Explanation :
Government debt (also known as public debt, national debt) is the debt owed by a central government. Government debt is one method of financing government operations, but it is not the only method. Governments can also create money to monetize their debts, thereby removing the need to pay interest. But this practice simply reduces government interest costs rather than truly canceling government debt. Governments usually borrow by issuing securities, government bonds and bills. Less creditworthy countries sometimes borrow directly from a supranational organization (e.g. the World Bank) or international financial institutions.
[14] What is Value Added Tax (VAT)?
A.
A simple, transparent, easy to pay tax imposed on consumers
B.
A new initiative taken by the Government to increase the tax-burden of high income groups
C.
A single tax that replaces State taxes like, surcharge, turnover tax, etc.
D.
A new tax to be imposed on the producers of capital goods
Ans:
A single tax that replaces State taxes like, surcharge, turnover tax, etc.
Explanation :
A value added tax (VAT) is a form of consumption tax. A VAT is like a sales tax in that ultimately only the end consumer is taxed. It differs from the sales tax in that, with the latter, the tax is collected and remitted to the government only once, at the point of purchase by the end consumer. VAT comes under the single tax system based primarily or exclusively on one tax, typically chosen for its special properties.
[15] What is referred to as 'Depository Services'?
A.
A new scheme of fixed deposits
B.
A method for regulating stock exchanges
C.
An agency for safe-keeping of securities
D.
An advisory service to investors
Ans:
An agency for safe-keeping of securities
Explanation :
It is a service offered by a securities depository under which the depository maintains book accounts recording the ownership of securities held on behalf of the depository's participants, for eligible securities.
[16] The terms 'Bull' and 'Bear' are associated with -
A.
Banking
B.
Foreign Trade
C.
Stock Market
D.
Internet Trade
Ans:
Stock Market
Explanation :
The terms 'bull' and 'bear' describe upward and downward trends respectively of the stock market. A bear market refers to a decline in prices, usually for a period of a few months, in a single security or asset, group of securities or the securities market as a whole. A bull market is when prices are rising.
[17] A currency whose exchange rate is influenced by the government is a/an -
A.
Unmanaged Currency
B.
Managed Currency
C.
Scarce Currency
D.
Surplus Currency
Ans:
Managed Currency
Explanation :
Managed currency refers to currency whose ex-change rate is not determined by the free-market forces of demand and supply but instead by the government's intervention through the country's central bank.
[18] Which one of the following statements is correct?
A.
Good money drives bad money out of circulation
B.
Bad money drives good money out of circulation
C.
Good and bad money cannot circulate together
D.
Cannot say
Ans:
Bad money drives good money out of circulation
Explanation :
One of the most famous axioms in economics is "bad money drives out good." This rule has generally been attributed to Sir Thomas Gresham (1519-1579), an English financier who advised King Edward VI and Queen Elizabeth I with regard to financial matters, and it is popularly known as Gresham's Law. The key prerequisite is that there must be two forms of money or currency (with the same face value) in circulation simultaneously.
[19] Devaluation of currency leads to -
A.
expansion of export trade
B.
contraction of import trade
C.
expansion of import substitution
D.
All of the above
Ans:
All of the above
Explanation :
Devaluation in modern monetary policy is a reduction in the value of a currency with respect to those goods, services or other monetary units with which that currency can be exchanged. There are two implications for currency devaluation. First, de-valuation makes a country's exports relatively less expensive for foreigners and second, it makes foreign products relatively more expensive for domestic consumers, discouraging imports. As a result, this may help to reduce a country's trade deficit. Import substitution means promotion of export to replace imports. It is also fallout of devaluation.
[20] As a result of higher rate of inflation in India, the U.S. dollar will -
A.
Depreciate
B.
Constant
C.
Negligible
D.
Appreciate
Ans:
Appreciate
Explanation :
A relatively higher rate of inflation causing rise in prices of the goods in India as compared to those in the USA will make US goods relatively cheaper and the Indian goods expensive. This will lead to rise in imports of US goods into India and the reduction in Indian exports to the USA that will, in turn, cause the foreign exchange rate of dollar in terms of rupees to rise and the price of Indian rupee in terms of dollar will fall. Thus, as a result of higher rate of inflation in India, the US dollar -will appreciate and the Indian rupee will depreciate.
[21] Which type of foreign investment is considered as unsafe?
A.
Foreign Direct Investment (FDI)
B.
Portfolio Investment
C.
NRI deposits
D.
External commercial borrowing
Ans:
Portfolio Investment
Explanation :
Portfolio Investments are considered unsafe. These are investments in the form of a group (portfolio) of assets, including transactions in equity securities, such as common stock, and debt securities, such as banknotes, bonds, and debentures. Portfolio investments are passive investments, as they do not entail active management or control of the issuing company. Rather, the purpose of the investment is solely financial gain, in contrast to foreign direct investment (FDI), which allows an investor to exercise a certain degree of managerial control over a company.
[22] 'Mixed economy' refers to -
A.
The co-existence of heavy, small scale and cottage industries
B.
The promotion of agriculture as well as cottage industries
C.
The co-existence of rich as well as poor
D.
The co-existence of public as well as private sector
Ans:
the co-existence of public as well as private sector
Explanation :
Mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies.
[23] Golden Handshake Scheme is associated with -
A.
Inviting foreign companies
B.
Private investment in public enterprises
C.
Establishing joint enterprises
D.
Voluntary retirement
Ans:
Voluntary retirement
Explanation :
A golden handshake is a clause in an executive employment contract that provides the executive with a significant severance package in the case that the executive loses his or her job through firing, restructuring, or even scheduled retirement. This can be in the form of cash, equity, and other benefits, and is often accompanied by an accelerated vesting of stock options.
[24] Stagflation is a situation of -
A.
stagnation and deflation
B.
stagnation and recession
C.
stagnation and inflation
D.
stagnation and recovery
Ans:
stagnation and inflation
Explanation :
Stagflation is a situation of stagnation in which the inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high. Stagflation occurs when the economy isn't growing but prices are, which is not a good situation for a country to be in
[25] Devaluation makes import -
A.
Competitive
B.
Inelastic
C.
Cheaper
D.
Dearer
Ans:
Dearer
Explanation :
Devaluation makes import expensive and discourages it, while the export of a country that devalues becomes cheaper and thereby induces trade partners to import more goods from her. Nations that produce industrial goods on a large scale stand to benefit from devaluation.
Explanation :
Full employment refers to a situation in which every able bodied person who is willing to work at the prevailing rate of wages is, in fact, employed. It implies absence of involuntary unemployment which occurs when those who are willing to work at the going wage rate do not get work.
[6] What is needed for creating demand?
A.
Production
B.
Price
C.
Income
D.
Import
Ans:
Production
Explanation :
Demand refers to how much (quantity) of a product or service is desired by buyers. The quantity demanded is the amount of a product people are willing to buy at a certain price; the relationship between price and quantity demanded is known as the demand relationship. So for demand to originate, a product is required first.
[7] Which of the statements is Correct About India's national income?
A.
Percentage share of agriculture is higher than services
B.
Percentage share of industry is higher than agriculture
C.
Percentage share of services is higher than industry
D.
Percentage share of services is higher than agriculture and industry put together
Ans:
Percentage share of services is higher than agriculture and industry put together
Explanation :
The services sector has the largest share in the GDP, accounting for 55% in 2007, up from 15% in 1950. Industry accounts for 28% of the GDP and employ 14% of the total workforce. Agriculture and allied sectors like forestry, logging and fishing ac-counted for 15.7% of the GDP in 2009-10.
[8] Who among the following is not a classical economist?
A.
David Ricardo
B.
John Stuart Mill
C.
Thomas Malthus
D.
John Maynard Keynes
Ans:
John Maynard Keynes
Explanation :
Classical economics is widely regarded as the first modern school of economic thought. Its major developers include Adam Smith, Jean-Baptiste Say, David Ricardo, Thomas Malthus and John Stuart Mill. John Maynard Keynes was a British economist whose ideas have profoundly affected the theory and practice of modern macroeconomics and formed the economic policies of governments.
[9] The difference in the value of visible exports and visible imports is called :
A.
Balance Sheet of items
B.
Balance of Payments
C.
Balance of Trade
D.
Balance of Account
Ans:
Balance of Trade
Explanation :
Balance of Trade refers to the difference between the value of a country's visible imports and visible exports. Also known as the visible balance, it forms part of the balance of payments current account. When the value of visible imports totals more than the value of visible exports, it is known as an adverse balance of trade.
[10] Which of the following best indicates economic growth of a Nation?
A.
Agriculture income
B.
Per capita income
C.
Gross industrial production
D.
Inflation
Ans:
Per capita income
Explanation :
Some economists believe that economic growth is meaningless if it is not distributed across different segments of population. So per capita income is considered by some as a better indicator of economic growth since it measures the average income earned per person in country in a specified year. It serves as an indicator of a country's living standards and how wealth or income is distributed across the population. However, to a vast majority Gross Domestic Product (GDP) is the most comprehensive measure of over-all economic performance.
[11] Indirect taxes by nature are -
A.
degressive
B.
regressive
C.
progressive
D.
proportional
Ans:
regressive
Explanation :
An indirect tax is one in which the burden can be shifted to others. The tax payer is not the tax bearer. The impact and incidence of indirect taxes are on different persons. Since, most of the indirect taxes are not progressive in nature, individuals may not mind to pay them, In other words, indirect taxes are generally regressive in nature. Therefore, individuals would not be de-motivated to work and to save, which may increase investment.
[12] Taxation is a tool of -
A.
Monetary-policy
B.
Fiscal policy
C.
Price policy
D.
Wage policy
Ans:
Fiscal policy
Explanation :
In economics, fiscal policy is the use of government revenue collection (taxation) and expenditure (spending) to influence the economy. The two main instruments of fiscal policy are government taxation and expenditure.
[13] Which of the following is not viewed as national debt?
A.
Life Insurance Policies
B.
Long-term Government Bonds
C.
National Savings Certificates
D.
Provident Fund
Ans:
Life Insurance Policies
Explanation :
Government debt (also known as public debt, national debt) is the debt owed by a central government. Government debt is one method of financing government operations, but it is not the only method. Governments can also create money to monetize their debts, thereby removing the need to pay interest. But this practice simply reduces government interest costs rather than truly canceling government debt. Governments usually borrow by issuing securities, government bonds and bills. Less creditworthy countries sometimes borrow directly from a supranational organization (e.g. the World Bank) or international financial institutions.
[14] What is Value Added Tax (VAT)?
A.
A simple, transparent, easy to pay tax imposed on consumers
B.
A new initiative taken by the Government to increase the tax-burden of high income groups
C.
A single tax that replaces State taxes like, surcharge, turnover tax, etc.
D.
A new tax to be imposed on the producers of capital goods
Ans:
A single tax that replaces State taxes like, surcharge, turnover tax, etc.
Explanation :
A value added tax (VAT) is a form of consumption tax. A VAT is like a sales tax in that ultimately only the end consumer is taxed. It differs from the sales tax in that, with the latter, the tax is collected and remitted to the government only once, at the point of purchase by the end consumer. VAT comes under the single tax system based primarily or exclusively on one tax, typically chosen for its special properties.
[15] What is referred to as 'Depository Services'?
A.
A new scheme of fixed deposits
B.
A method for regulating stock exchanges
C.
An agency for safe-keeping of securities
D.
An advisory service to investors
Ans:
An agency for safe-keeping of securities
Explanation :
It is a service offered by a securities depository under which the depository maintains book accounts recording the ownership of securities held on behalf of the depository's participants, for eligible securities.
[16] The terms 'Bull' and 'Bear' are associated with -
A.
Banking
B.
Foreign Trade
C.
Stock Market
D.
Internet Trade
Ans:
Stock Market
Explanation :
The terms 'bull' and 'bear' describe upward and downward trends respectively of the stock market. A bear market refers to a decline in prices, usually for a period of a few months, in a single security or asset, group of securities or the securities market as a whole. A bull market is when prices are rising.
[17] A currency whose exchange rate is influenced by the government is a/an -
A.
Unmanaged Currency
B.
Managed Currency
C.
Scarce Currency
D.
Surplus Currency
Ans:
Managed Currency
Explanation :
Managed currency refers to currency whose ex-change rate is not determined by the free-market forces of demand and supply but instead by the government's intervention through the country's central bank.
[18] Which one of the following statements is correct?
A.
Good money drives bad money out of circulation
B.
Bad money drives good money out of circulation
C.
Good and bad money cannot circulate together
D.
Cannot say
Ans:
Bad money drives good money out of circulation
Explanation :
One of the most famous axioms in economics is "bad money drives out good." This rule has generally been attributed to Sir Thomas Gresham (1519-1579), an English financier who advised King Edward VI and Queen Elizabeth I with regard to financial matters, and it is popularly known as Gresham's Law. The key prerequisite is that there must be two forms of money or currency (with the same face value) in circulation simultaneously.
[19] Devaluation of currency leads to -
A.
expansion of export trade
B.
contraction of import trade
C.
expansion of import substitution
D.
All of the above
Ans:
All of the above
Explanation :
Devaluation in modern monetary policy is a reduction in the value of a currency with respect to those goods, services or other monetary units with which that currency can be exchanged. There are two implications for currency devaluation. First, de-valuation makes a country's exports relatively less expensive for foreigners and second, it makes foreign products relatively more expensive for domestic consumers, discouraging imports. As a result, this may help to reduce a country's trade deficit. Import substitution means promotion of export to replace imports. It is also fallout of devaluation.
[20] As a result of higher rate of inflation in India, the U.S. dollar will -
A.
Depreciate
B.
Constant
C.
Negligible
D.
Appreciate
Ans:
Appreciate
Explanation :
A relatively higher rate of inflation causing rise in prices of the goods in India as compared to those in the USA will make US goods relatively cheaper and the Indian goods expensive. This will lead to rise in imports of US goods into India and the reduction in Indian exports to the USA that will, in turn, cause the foreign exchange rate of dollar in terms of rupees to rise and the price of Indian rupee in terms of dollar will fall. Thus, as a result of higher rate of inflation in India, the US dollar -will appreciate and the Indian rupee will depreciate.
[21] Which type of foreign investment is considered as unsafe?
A.
Foreign Direct Investment (FDI)
B.
Portfolio Investment
C.
NRI deposits
D.
External commercial borrowing
Ans:
Portfolio Investment
Explanation :
Portfolio Investments are considered unsafe. These are investments in the form of a group (portfolio) of assets, including transactions in equity securities, such as common stock, and debt securities, such as banknotes, bonds, and debentures. Portfolio investments are passive investments, as they do not entail active management or control of the issuing company. Rather, the purpose of the investment is solely financial gain, in contrast to foreign direct investment (FDI), which allows an investor to exercise a certain degree of managerial control over a company.
[22] 'Mixed economy' refers to -
A.
The co-existence of heavy, small scale and cottage industries
B.
The promotion of agriculture as well as cottage industries
C.
The co-existence of rich as well as poor
D.
The co-existence of public as well as private sector
Ans:
the co-existence of public as well as private sector
Explanation :
Mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies.
[23] Golden Handshake Scheme is associated with -
A.
Inviting foreign companies
B.
Private investment in public enterprises
C.
Establishing joint enterprises
D.
Voluntary retirement
Ans:
Voluntary retirement
Explanation :
A golden handshake is a clause in an executive employment contract that provides the executive with a significant severance package in the case that the executive loses his or her job through firing, restructuring, or even scheduled retirement. This can be in the form of cash, equity, and other benefits, and is often accompanied by an accelerated vesting of stock options.
[24] Stagflation is a situation of -
A.
stagnation and deflation
B.
stagnation and recession
C.
stagnation and inflation
D.
stagnation and recovery
Ans:
stagnation and inflation
Explanation :
Stagflation is a situation of stagnation in which the inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high. Stagflation occurs when the economy isn't growing but prices are, which is not a good situation for a country to be in
[25] Devaluation makes import -
A.
Competitive
B.
Inelastic
C.
Cheaper
D.
Dearer
Ans:
Dearer
Explanation :
Devaluation makes import expensive and discourages it, while the export of a country that devalues becomes cheaper and thereby induces trade partners to import more goods from her. Nations that produce industrial goods on a large scale stand to benefit from devaluation.
Explanation :
The services sector has the largest share in the GDP, accounting for 55% in 2007, up from 15% in 1950. Industry accounts for 28% of the GDP and employ 14% of the total workforce. Agriculture and allied sectors like forestry, logging and fishing ac-counted for 15.7% of the GDP in 2009-10.
[8] Who among the following is not a classical economist?
A.
David Ricardo
B.
John Stuart Mill
C.
Thomas Malthus
D.
John Maynard Keynes
Ans:
John Maynard Keynes
Explanation :
Classical economics is widely regarded as the first modern school of economic thought. Its major developers include Adam Smith, Jean-Baptiste Say, David Ricardo, Thomas Malthus and John Stuart Mill. John Maynard Keynes was a British economist whose ideas have profoundly affected the theory and practice of modern macroeconomics and formed the economic policies of governments.
[9] The difference in the value of visible exports and visible imports is called :
A.
Balance Sheet of items
B.
Balance of Payments
C.
Balance of Trade
D.
Balance of Account
Ans:
Balance of Trade
Explanation :
Balance of Trade refers to the difference between the value of a country's visible imports and visible exports. Also known as the visible balance, it forms part of the balance of payments current account. When the value of visible imports totals more than the value of visible exports, it is known as an adverse balance of trade.
[10] Which of the following best indicates economic growth of a Nation?
A.
Agriculture income
B.
Per capita income
C.
Gross industrial production
D.
Inflation
Ans:
Per capita income
Explanation :
Some economists believe that economic growth is meaningless if it is not distributed across different segments of population. So per capita income is considered by some as a better indicator of economic growth since it measures the average income earned per person in country in a specified year. It serves as an indicator of a country's living standards and how wealth or income is distributed across the population. However, to a vast majority Gross Domestic Product (GDP) is the most comprehensive measure of over-all economic performance.
[11] Indirect taxes by nature are -
A.
degressive
B.
regressive
C.
progressive
D.
proportional
Ans:
regressive
Explanation :
An indirect tax is one in which the burden can be shifted to others. The tax payer is not the tax bearer. The impact and incidence of indirect taxes are on different persons. Since, most of the indirect taxes are not progressive in nature, individuals may not mind to pay them, In other words, indirect taxes are generally regressive in nature. Therefore, individuals would not be de-motivated to work and to save, which may increase investment.
[12] Taxation is a tool of -
A.
Monetary-policy
B.
Fiscal policy
C.
Price policy
D.
Wage policy
Ans:
Fiscal policy
Explanation :
In economics, fiscal policy is the use of government revenue collection (taxation) and expenditure (spending) to influence the economy. The two main instruments of fiscal policy are government taxation and expenditure.
[13] Which of the following is not viewed as national debt?
A.
Life Insurance Policies
B.
Long-term Government Bonds
C.
National Savings Certificates
D.
Provident Fund
Ans:
Life Insurance Policies
Explanation :
Government debt (also known as public debt, national debt) is the debt owed by a central government. Government debt is one method of financing government operations, but it is not the only method. Governments can also create money to monetize their debts, thereby removing the need to pay interest. But this practice simply reduces government interest costs rather than truly canceling government debt. Governments usually borrow by issuing securities, government bonds and bills. Less creditworthy countries sometimes borrow directly from a supranational organization (e.g. the World Bank) or international financial institutions.
[14] What is Value Added Tax (VAT)?
A.
A simple, transparent, easy to pay tax imposed on consumers
B.
A new initiative taken by the Government to increase the tax-burden of high income groups
C.
A single tax that replaces State taxes like, surcharge, turnover tax, etc.
D.
A new tax to be imposed on the producers of capital goods
Ans:
A single tax that replaces State taxes like, surcharge, turnover tax, etc.
Explanation :
A value added tax (VAT) is a form of consumption tax. A VAT is like a sales tax in that ultimately only the end consumer is taxed. It differs from the sales tax in that, with the latter, the tax is collected and remitted to the government only once, at the point of purchase by the end consumer. VAT comes under the single tax system based primarily or exclusively on one tax, typically chosen for its special properties.
[15] What is referred to as 'Depository Services'?
A.
A new scheme of fixed deposits
B.
A method for regulating stock exchanges
C.
An agency for safe-keeping of securities
D.
An advisory service to investors
Ans:
An agency for safe-keeping of securities
Explanation :
It is a service offered by a securities depository under which the depository maintains book accounts recording the ownership of securities held on behalf of the depository's participants, for eligible securities.
[16] The terms 'Bull' and 'Bear' are associated with -
A.
Banking
B.
Foreign Trade
C.
Stock Market
D.
Internet Trade
Ans:
Stock Market
Explanation :
The terms 'bull' and 'bear' describe upward and downward trends respectively of the stock market. A bear market refers to a decline in prices, usually for a period of a few months, in a single security or asset, group of securities or the securities market as a whole. A bull market is when prices are rising.
[17] A currency whose exchange rate is influenced by the government is a/an -
A.
Unmanaged Currency
B.
Managed Currency
C.
Scarce Currency
D.
Surplus Currency
Ans:
Managed Currency
Explanation :
Managed currency refers to currency whose ex-change rate is not determined by the free-market forces of demand and supply but instead by the government's intervention through the country's central bank.
[18] Which one of the following statements is correct?
A.
Good money drives bad money out of circulation
B.
Bad money drives good money out of circulation
C.
Good and bad money cannot circulate together
D.
Cannot say
Ans:
Bad money drives good money out of circulation
Explanation :
One of the most famous axioms in economics is "bad money drives out good." This rule has generally been attributed to Sir Thomas Gresham (1519-1579), an English financier who advised King Edward VI and Queen Elizabeth I with regard to financial matters, and it is popularly known as Gresham's Law. The key prerequisite is that there must be two forms of money or currency (with the same face value) in circulation simultaneously.
[19] Devaluation of currency leads to -
A.
expansion of export trade
B.
contraction of import trade
C.
expansion of import substitution
D.
All of the above
Ans:
All of the above
Explanation :
Devaluation in modern monetary policy is a reduction in the value of a currency with respect to those goods, services or other monetary units with which that currency can be exchanged. There are two implications for currency devaluation. First, de-valuation makes a country's exports relatively less expensive for foreigners and second, it makes foreign products relatively more expensive for domestic consumers, discouraging imports. As a result, this may help to reduce a country's trade deficit. Import substitution means promotion of export to replace imports. It is also fallout of devaluation.
[20] As a result of higher rate of inflation in India, the U.S. dollar will -
A.
Depreciate
B.
Constant
C.
Negligible
D.
Appreciate
Ans:
Appreciate
Explanation :
A relatively higher rate of inflation causing rise in prices of the goods in India as compared to those in the USA will make US goods relatively cheaper and the Indian goods expensive. This will lead to rise in imports of US goods into India and the reduction in Indian exports to the USA that will, in turn, cause the foreign exchange rate of dollar in terms of rupees to rise and the price of Indian rupee in terms of dollar will fall. Thus, as a result of higher rate of inflation in India, the US dollar -will appreciate and the Indian rupee will depreciate.
[21] Which type of foreign investment is considered as unsafe?
A.
Foreign Direct Investment (FDI)
B.
Portfolio Investment
C.
NRI deposits
D.
External commercial borrowing
Ans:
Portfolio Investment
Explanation :
Portfolio Investments are considered unsafe. These are investments in the form of a group (portfolio) of assets, including transactions in equity securities, such as common stock, and debt securities, such as banknotes, bonds, and debentures. Portfolio investments are passive investments, as they do not entail active management or control of the issuing company. Rather, the purpose of the investment is solely financial gain, in contrast to foreign direct investment (FDI), which allows an investor to exercise a certain degree of managerial control over a company.
[22] 'Mixed economy' refers to -
A.
The co-existence of heavy, small scale and cottage industries
B.
The promotion of agriculture as well as cottage industries
C.
The co-existence of rich as well as poor
D.
The co-existence of public as well as private sector
Ans:
the co-existence of public as well as private sector
Explanation :
Mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies.
[23] Golden Handshake Scheme is associated with -
A.
Inviting foreign companies
B.
Private investment in public enterprises
C.
Establishing joint enterprises
D.
Voluntary retirement
Ans:
Voluntary retirement
Explanation :
A golden handshake is a clause in an executive employment contract that provides the executive with a significant severance package in the case that the executive loses his or her job through firing, restructuring, or even scheduled retirement. This can be in the form of cash, equity, and other benefits, and is often accompanied by an accelerated vesting of stock options.
[24] Stagflation is a situation of -
A.
stagnation and deflation
B.
stagnation and recession
C.
stagnation and inflation
D.
stagnation and recovery
Ans:
stagnation and inflation
Explanation :
Stagflation is a situation of stagnation in which the inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high. Stagflation occurs when the economy isn't growing but prices are, which is not a good situation for a country to be in
[25] Devaluation makes import -
A.
Competitive
B.
Inelastic
C.
Cheaper
D.
Dearer
Ans:
Dearer
Explanation :
Devaluation makes import expensive and discourages it, while the export of a country that devalues becomes cheaper and thereby induces trade partners to import more goods from her. Nations that produce industrial goods on a large scale stand to benefit from devaluation.
Explanation :
Balance of Trade refers to the difference between the value of a country's visible imports and visible exports. Also known as the visible balance, it forms part of the balance of payments current account. When the value of visible imports totals more than the value of visible exports, it is known as an adverse balance of trade.
[10] Which of the following best indicates economic growth of a Nation?
A.
Agriculture income
B.
Per capita income
C.
Gross industrial production
D.
Inflation
Ans:
Per capita income
Explanation :
Some economists believe that economic growth is meaningless if it is not distributed across different segments of population. So per capita income is considered by some as a better indicator of economic growth since it measures the average income earned per person in country in a specified year. It serves as an indicator of a country's living standards and how wealth or income is distributed across the population. However, to a vast majority Gross Domestic Product (GDP) is the most comprehensive measure of over-all economic performance.
[11] Indirect taxes by nature are -
A.
degressive
B.
regressive
C.
progressive
D.
proportional
Ans:
regressive
Explanation :
An indirect tax is one in which the burden can be shifted to others. The tax payer is not the tax bearer. The impact and incidence of indirect taxes are on different persons. Since, most of the indirect taxes are not progressive in nature, individuals may not mind to pay them, In other words, indirect taxes are generally regressive in nature. Therefore, individuals would not be de-motivated to work and to save, which may increase investment.
[12] Taxation is a tool of -
A.
Monetary-policy
B.
Fiscal policy
C.
Price policy
D.
Wage policy
Ans:
Fiscal policy
Explanation :
In economics, fiscal policy is the use of government revenue collection (taxation) and expenditure (spending) to influence the economy. The two main instruments of fiscal policy are government taxation and expenditure.
[13] Which of the following is not viewed as national debt?
A.
Life Insurance Policies
B.
Long-term Government Bonds
C.
National Savings Certificates
D.
Provident Fund
Ans:
Life Insurance Policies
Explanation :
Government debt (also known as public debt, national debt) is the debt owed by a central government. Government debt is one method of financing government operations, but it is not the only method. Governments can also create money to monetize their debts, thereby removing the need to pay interest. But this practice simply reduces government interest costs rather than truly canceling government debt. Governments usually borrow by issuing securities, government bonds and bills. Less creditworthy countries sometimes borrow directly from a supranational organization (e.g. the World Bank) or international financial institutions.
[14] What is Value Added Tax (VAT)?
A.
A simple, transparent, easy to pay tax imposed on consumers
B.
A new initiative taken by the Government to increase the tax-burden of high income groups
C.
A single tax that replaces State taxes like, surcharge, turnover tax, etc.
D.
A new tax to be imposed on the producers of capital goods
Ans:
A single tax that replaces State taxes like, surcharge, turnover tax, etc.
Explanation :
A value added tax (VAT) is a form of consumption tax. A VAT is like a sales tax in that ultimately only the end consumer is taxed. It differs from the sales tax in that, with the latter, the tax is collected and remitted to the government only once, at the point of purchase by the end consumer. VAT comes under the single tax system based primarily or exclusively on one tax, typically chosen for its special properties.
[15] What is referred to as 'Depository Services'?
A.
A new scheme of fixed deposits
B.
A method for regulating stock exchanges
C.
An agency for safe-keeping of securities
D.
An advisory service to investors
Ans:
An agency for safe-keeping of securities
Explanation :
It is a service offered by a securities depository under which the depository maintains book accounts recording the ownership of securities held on behalf of the depository's participants, for eligible securities.
[16] The terms 'Bull' and 'Bear' are associated with -
A.
Banking
B.
Foreign Trade
C.
Stock Market
D.
Internet Trade
Ans:
Stock Market
Explanation :
The terms 'bull' and 'bear' describe upward and downward trends respectively of the stock market. A bear market refers to a decline in prices, usually for a period of a few months, in a single security or asset, group of securities or the securities market as a whole. A bull market is when prices are rising.
[17] A currency whose exchange rate is influenced by the government is a/an -
A.
Unmanaged Currency
B.
Managed Currency
C.
Scarce Currency
D.
Surplus Currency
Ans:
Managed Currency
Explanation :
Managed currency refers to currency whose ex-change rate is not determined by the free-market forces of demand and supply but instead by the government's intervention through the country's central bank.
[18] Which one of the following statements is correct?
A.
Good money drives bad money out of circulation
B.
Bad money drives good money out of circulation
C.
Good and bad money cannot circulate together
D.
Cannot say
Ans:
Bad money drives good money out of circulation
Explanation :
One of the most famous axioms in economics is "bad money drives out good." This rule has generally been attributed to Sir Thomas Gresham (1519-1579), an English financier who advised King Edward VI and Queen Elizabeth I with regard to financial matters, and it is popularly known as Gresham's Law. The key prerequisite is that there must be two forms of money or currency (with the same face value) in circulation simultaneously.
[19] Devaluation of currency leads to -
A.
expansion of export trade
B.
contraction of import trade
C.
expansion of import substitution
D.
All of the above
Ans:
All of the above
Explanation :
Devaluation in modern monetary policy is a reduction in the value of a currency with respect to those goods, services or other monetary units with which that currency can be exchanged. There are two implications for currency devaluation. First, de-valuation makes a country's exports relatively less expensive for foreigners and second, it makes foreign products relatively more expensive for domestic consumers, discouraging imports. As a result, this may help to reduce a country's trade deficit. Import substitution means promotion of export to replace imports. It is also fallout of devaluation.
[20] As a result of higher rate of inflation in India, the U.S. dollar will -
A.
Depreciate
B.
Constant
C.
Negligible
D.
Appreciate
Ans:
Appreciate
Explanation :
A relatively higher rate of inflation causing rise in prices of the goods in India as compared to those in the USA will make US goods relatively cheaper and the Indian goods expensive. This will lead to rise in imports of US goods into India and the reduction in Indian exports to the USA that will, in turn, cause the foreign exchange rate of dollar in terms of rupees to rise and the price of Indian rupee in terms of dollar will fall. Thus, as a result of higher rate of inflation in India, the US dollar -will appreciate and the Indian rupee will depreciate.
[21] Which type of foreign investment is considered as unsafe?
A.
Foreign Direct Investment (FDI)
B.
Portfolio Investment
C.
NRI deposits
D.
External commercial borrowing
Ans:
Portfolio Investment
Explanation :
Portfolio Investments are considered unsafe. These are investments in the form of a group (portfolio) of assets, including transactions in equity securities, such as common stock, and debt securities, such as banknotes, bonds, and debentures. Portfolio investments are passive investments, as they do not entail active management or control of the issuing company. Rather, the purpose of the investment is solely financial gain, in contrast to foreign direct investment (FDI), which allows an investor to exercise a certain degree of managerial control over a company.
[22] 'Mixed economy' refers to -
A.
The co-existence of heavy, small scale and cottage industries
B.
The promotion of agriculture as well as cottage industries
C.
The co-existence of rich as well as poor
D.
The co-existence of public as well as private sector
Ans:
the co-existence of public as well as private sector
Explanation :
Mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies.
[23] Golden Handshake Scheme is associated with -
A.
Inviting foreign companies
B.
Private investment in public enterprises
C.
Establishing joint enterprises
D.
Voluntary retirement
Ans:
Voluntary retirement
Explanation :
A golden handshake is a clause in an executive employment contract that provides the executive with a significant severance package in the case that the executive loses his or her job through firing, restructuring, or even scheduled retirement. This can be in the form of cash, equity, and other benefits, and is often accompanied by an accelerated vesting of stock options.
[24] Stagflation is a situation of -
A.
stagnation and deflation
B.
stagnation and recession
C.
stagnation and inflation
D.
stagnation and recovery
Ans:
stagnation and inflation
Explanation :
Stagflation is a situation of stagnation in which the inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high. Stagflation occurs when the economy isn't growing but prices are, which is not a good situation for a country to be in
[25] Devaluation makes import -
A.
Competitive
B.
Inelastic
C.
Cheaper
D.
Dearer
Ans:
Dearer
Explanation :
Devaluation makes import expensive and discourages it, while the export of a country that devalues becomes cheaper and thereby induces trade partners to import more goods from her. Nations that produce industrial goods on a large scale stand to benefit from devaluation.
Explanation :
An indirect tax is one in which the burden can be shifted to others. The tax payer is not the tax bearer. The impact and incidence of indirect taxes are on different persons. Since, most of the indirect taxes are not progressive in nature, individuals may not mind to pay them, In other words, indirect taxes are generally regressive in nature. Therefore, individuals would not be de-motivated to work and to save, which may increase investment.
[12] Taxation is a tool of -
A.
Monetary-policy
B.
Fiscal policy
C.
Price policy
D.
Wage policy
Ans:
Fiscal policy
Explanation :
In economics, fiscal policy is the use of government revenue collection (taxation) and expenditure (spending) to influence the economy. The two main instruments of fiscal policy are government taxation and expenditure.
[13] Which of the following is not viewed as national debt?
A.
Life Insurance Policies
B.
Long-term Government Bonds
C.
National Savings Certificates
D.
Provident Fund
Ans:
Life Insurance Policies
Explanation :
Government debt (also known as public debt, national debt) is the debt owed by a central government. Government debt is one method of financing government operations, but it is not the only method. Governments can also create money to monetize their debts, thereby removing the need to pay interest. But this practice simply reduces government interest costs rather than truly canceling government debt. Governments usually borrow by issuing securities, government bonds and bills. Less creditworthy countries sometimes borrow directly from a supranational organization (e.g. the World Bank) or international financial institutions.
[14] What is Value Added Tax (VAT)?
A.
A simple, transparent, easy to pay tax imposed on consumers
B.
A new initiative taken by the Government to increase the tax-burden of high income groups
C.
A single tax that replaces State taxes like, surcharge, turnover tax, etc.
D.
A new tax to be imposed on the producers of capital goods
Ans:
A single tax that replaces State taxes like, surcharge, turnover tax, etc.
Explanation :
A value added tax (VAT) is a form of consumption tax. A VAT is like a sales tax in that ultimately only the end consumer is taxed. It differs from the sales tax in that, with the latter, the tax is collected and remitted to the government only once, at the point of purchase by the end consumer. VAT comes under the single tax system based primarily or exclusively on one tax, typically chosen for its special properties.
[15] What is referred to as 'Depository Services'?
A.
A new scheme of fixed deposits
B.
A method for regulating stock exchanges
C.
An agency for safe-keeping of securities
D.
An advisory service to investors
Ans:
An agency for safe-keeping of securities
Explanation :
It is a service offered by a securities depository under which the depository maintains book accounts recording the ownership of securities held on behalf of the depository's participants, for eligible securities.
[16] The terms 'Bull' and 'Bear' are associated with -
A.
Banking
B.
Foreign Trade
C.
Stock Market
D.
Internet Trade
Ans:
Stock Market
Explanation :
The terms 'bull' and 'bear' describe upward and downward trends respectively of the stock market. A bear market refers to a decline in prices, usually for a period of a few months, in a single security or asset, group of securities or the securities market as a whole. A bull market is when prices are rising.
[17] A currency whose exchange rate is influenced by the government is a/an -
A.
Unmanaged Currency
B.
Managed Currency
C.
Scarce Currency
D.
Surplus Currency
Ans:
Managed Currency
Explanation :
Managed currency refers to currency whose ex-change rate is not determined by the free-market forces of demand and supply but instead by the government's intervention through the country's central bank.
[18] Which one of the following statements is correct?
A.
Good money drives bad money out of circulation
B.
Bad money drives good money out of circulation
C.
Good and bad money cannot circulate together
D.
Cannot say
Ans:
Bad money drives good money out of circulation
Explanation :
One of the most famous axioms in economics is "bad money drives out good." This rule has generally been attributed to Sir Thomas Gresham (1519-1579), an English financier who advised King Edward VI and Queen Elizabeth I with regard to financial matters, and it is popularly known as Gresham's Law. The key prerequisite is that there must be two forms of money or currency (with the same face value) in circulation simultaneously.
[19] Devaluation of currency leads to -
A.
expansion of export trade
B.
contraction of import trade
C.
expansion of import substitution
D.
All of the above
Ans:
All of the above
Explanation :
Devaluation in modern monetary policy is a reduction in the value of a currency with respect to those goods, services or other monetary units with which that currency can be exchanged. There are two implications for currency devaluation. First, de-valuation makes a country's exports relatively less expensive for foreigners and second, it makes foreign products relatively more expensive for domestic consumers, discouraging imports. As a result, this may help to reduce a country's trade deficit. Import substitution means promotion of export to replace imports. It is also fallout of devaluation.
[20] As a result of higher rate of inflation in India, the U.S. dollar will -
A.
Depreciate
B.
Constant
C.
Negligible
D.
Appreciate
Ans:
Appreciate
Explanation :
A relatively higher rate of inflation causing rise in prices of the goods in India as compared to those in the USA will make US goods relatively cheaper and the Indian goods expensive. This will lead to rise in imports of US goods into India and the reduction in Indian exports to the USA that will, in turn, cause the foreign exchange rate of dollar in terms of rupees to rise and the price of Indian rupee in terms of dollar will fall. Thus, as a result of higher rate of inflation in India, the US dollar -will appreciate and the Indian rupee will depreciate.
[21] Which type of foreign investment is considered as unsafe?
A.
Foreign Direct Investment (FDI)
B.
Portfolio Investment
C.
NRI deposits
D.
External commercial borrowing
Ans:
Portfolio Investment
Explanation :
Portfolio Investments are considered unsafe. These are investments in the form of a group (portfolio) of assets, including transactions in equity securities, such as common stock, and debt securities, such as banknotes, bonds, and debentures. Portfolio investments are passive investments, as they do not entail active management or control of the issuing company. Rather, the purpose of the investment is solely financial gain, in contrast to foreign direct investment (FDI), which allows an investor to exercise a certain degree of managerial control over a company.
[22] 'Mixed economy' refers to -
A.
The co-existence of heavy, small scale and cottage industries
B.
The promotion of agriculture as well as cottage industries
C.
The co-existence of rich as well as poor
D.
The co-existence of public as well as private sector
Ans:
the co-existence of public as well as private sector
Explanation :
Mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies.
[23] Golden Handshake Scheme is associated with -
A.
Inviting foreign companies
B.
Private investment in public enterprises
C.
Establishing joint enterprises
D.
Voluntary retirement
Ans:
Voluntary retirement
Explanation :
A golden handshake is a clause in an executive employment contract that provides the executive with a significant severance package in the case that the executive loses his or her job through firing, restructuring, or even scheduled retirement. This can be in the form of cash, equity, and other benefits, and is often accompanied by an accelerated vesting of stock options.
[24] Stagflation is a situation of -
A.
stagnation and deflation
B.
stagnation and recession
C.
stagnation and inflation
D.
stagnation and recovery
Ans:
stagnation and inflation
Explanation :
Stagflation is a situation of stagnation in which the inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high. Stagflation occurs when the economy isn't growing but prices are, which is not a good situation for a country to be in
[25] Devaluation makes import -
A.
Competitive
B.
Inelastic
C.
Cheaper
D.
Dearer
Ans:
Dearer
Explanation :
Devaluation makes import expensive and discourages it, while the export of a country that devalues becomes cheaper and thereby induces trade partners to import more goods from her. Nations that produce industrial goods on a large scale stand to benefit from devaluation.
Explanation :
Government debt (also known as public debt, national debt) is the debt owed by a central government. Government debt is one method of financing government operations, but it is not the only method. Governments can also create money to monetize their debts, thereby removing the need to pay interest. But this practice simply reduces government interest costs rather than truly canceling government debt. Governments usually borrow by issuing securities, government bonds and bills. Less creditworthy countries sometimes borrow directly from a supranational organization (e.g. the World Bank) or international financial institutions.
[14] What is Value Added Tax (VAT)?
A.
A simple, transparent, easy to pay tax imposed on consumers
B.
A new initiative taken by the Government to increase the tax-burden of high income groups
C.
A single tax that replaces State taxes like, surcharge, turnover tax, etc.
D.
A new tax to be imposed on the producers of capital goods
Ans:
A single tax that replaces State taxes like, surcharge, turnover tax, etc.
Explanation :
A value added tax (VAT) is a form of consumption tax. A VAT is like a sales tax in that ultimately only the end consumer is taxed. It differs from the sales tax in that, with the latter, the tax is collected and remitted to the government only once, at the point of purchase by the end consumer. VAT comes under the single tax system based primarily or exclusively on one tax, typically chosen for its special properties.
[15] What is referred to as 'Depository Services'?
A.
A new scheme of fixed deposits
B.
A method for regulating stock exchanges
C.
An agency for safe-keeping of securities
D.
An advisory service to investors
Ans:
An agency for safe-keeping of securities
Explanation :
It is a service offered by a securities depository under which the depository maintains book accounts recording the ownership of securities held on behalf of the depository's participants, for eligible securities.
[16] The terms 'Bull' and 'Bear' are associated with -
A.
Banking
B.
Foreign Trade
C.
Stock Market
D.
Internet Trade
Ans:
Stock Market
Explanation :
The terms 'bull' and 'bear' describe upward and downward trends respectively of the stock market. A bear market refers to a decline in prices, usually for a period of a few months, in a single security or asset, group of securities or the securities market as a whole. A bull market is when prices are rising.
[17] A currency whose exchange rate is influenced by the government is a/an -
A.
Unmanaged Currency
B.
Managed Currency
C.
Scarce Currency
D.
Surplus Currency
Ans:
Managed Currency
Explanation :
Managed currency refers to currency whose ex-change rate is not determined by the free-market forces of demand and supply but instead by the government's intervention through the country's central bank.
[18] Which one of the following statements is correct?
A.
Good money drives bad money out of circulation
B.
Bad money drives good money out of circulation
C.
Good and bad money cannot circulate together
D.
Cannot say
Ans:
Bad money drives good money out of circulation
Explanation :
One of the most famous axioms in economics is "bad money drives out good." This rule has generally been attributed to Sir Thomas Gresham (1519-1579), an English financier who advised King Edward VI and Queen Elizabeth I with regard to financial matters, and it is popularly known as Gresham's Law. The key prerequisite is that there must be two forms of money or currency (with the same face value) in circulation simultaneously.
[19] Devaluation of currency leads to -
A.
expansion of export trade
B.
contraction of import trade
C.
expansion of import substitution
D.
All of the above
Ans:
All of the above
Explanation :
Devaluation in modern monetary policy is a reduction in the value of a currency with respect to those goods, services or other monetary units with which that currency can be exchanged. There are two implications for currency devaluation. First, de-valuation makes a country's exports relatively less expensive for foreigners and second, it makes foreign products relatively more expensive for domestic consumers, discouraging imports. As a result, this may help to reduce a country's trade deficit. Import substitution means promotion of export to replace imports. It is also fallout of devaluation.
[20] As a result of higher rate of inflation in India, the U.S. dollar will -
A.
Depreciate
B.
Constant
C.
Negligible
D.
Appreciate
Ans:
Appreciate
Explanation :
A relatively higher rate of inflation causing rise in prices of the goods in India as compared to those in the USA will make US goods relatively cheaper and the Indian goods expensive. This will lead to rise in imports of US goods into India and the reduction in Indian exports to the USA that will, in turn, cause the foreign exchange rate of dollar in terms of rupees to rise and the price of Indian rupee in terms of dollar will fall. Thus, as a result of higher rate of inflation in India, the US dollar -will appreciate and the Indian rupee will depreciate.
[21] Which type of foreign investment is considered as unsafe?
A.
Foreign Direct Investment (FDI)
B.
Portfolio Investment
C.
NRI deposits
D.
External commercial borrowing
Ans:
Portfolio Investment
Explanation :
Portfolio Investments are considered unsafe. These are investments in the form of a group (portfolio) of assets, including transactions in equity securities, such as common stock, and debt securities, such as banknotes, bonds, and debentures. Portfolio investments are passive investments, as they do not entail active management or control of the issuing company. Rather, the purpose of the investment is solely financial gain, in contrast to foreign direct investment (FDI), which allows an investor to exercise a certain degree of managerial control over a company.
[22] 'Mixed economy' refers to -
A.
The co-existence of heavy, small scale and cottage industries
B.
The promotion of agriculture as well as cottage industries
C.
The co-existence of rich as well as poor
D.
The co-existence of public as well as private sector
Ans:
the co-existence of public as well as private sector
Explanation :
Mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies.
[23] Golden Handshake Scheme is associated with -
A.
Inviting foreign companies
B.
Private investment in public enterprises
C.
Establishing joint enterprises
D.
Voluntary retirement
Ans:
Voluntary retirement
Explanation :
A golden handshake is a clause in an executive employment contract that provides the executive with a significant severance package in the case that the executive loses his or her job through firing, restructuring, or even scheduled retirement. This can be in the form of cash, equity, and other benefits, and is often accompanied by an accelerated vesting of stock options.
[24] Stagflation is a situation of -
A.
stagnation and deflation
B.
stagnation and recession
C.
stagnation and inflation
D.
stagnation and recovery
Ans:
stagnation and inflation
Explanation :
Stagflation is a situation of stagnation in which the inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high. Stagflation occurs when the economy isn't growing but prices are, which is not a good situation for a country to be in
[25] Devaluation makes import -
A.
Competitive
B.
Inelastic
C.
Cheaper
D.
Dearer
Ans:
Dearer
Explanation :
Devaluation makes import expensive and discourages it, while the export of a country that devalues becomes cheaper and thereby induces trade partners to import more goods from her. Nations that produce industrial goods on a large scale stand to benefit from devaluation.
Explanation :
It is a service offered by a securities depository under which the depository maintains book accounts recording the ownership of securities held on behalf of the depository's participants, for eligible securities.
[16] The terms 'Bull' and 'Bear' are associated with -
A.
Banking
B.
Foreign Trade
C.
Stock Market
D.
Internet Trade
Ans:
Stock Market
Explanation :
The terms 'bull' and 'bear' describe upward and downward trends respectively of the stock market. A bear market refers to a decline in prices, usually for a period of a few months, in a single security or asset, group of securities or the securities market as a whole. A bull market is when prices are rising.
[17] A currency whose exchange rate is influenced by the government is a/an -
A.
Unmanaged Currency
B.
Managed Currency
C.
Scarce Currency
D.
Surplus Currency
Ans:
Managed Currency
Explanation :
Managed currency refers to currency whose ex-change rate is not determined by the free-market forces of demand and supply but instead by the government's intervention through the country's central bank.
[18] Which one of the following statements is correct?
A.
Good money drives bad money out of circulation
B.
Bad money drives good money out of circulation
C.
Good and bad money cannot circulate together
D.
Cannot say
Ans:
Bad money drives good money out of circulation
Explanation :
One of the most famous axioms in economics is "bad money drives out good." This rule has generally been attributed to Sir Thomas Gresham (1519-1579), an English financier who advised King Edward VI and Queen Elizabeth I with regard to financial matters, and it is popularly known as Gresham's Law. The key prerequisite is that there must be two forms of money or currency (with the same face value) in circulation simultaneously.
[19] Devaluation of currency leads to -
A.
expansion of export trade
B.
contraction of import trade
C.
expansion of import substitution
D.
All of the above
Ans:
All of the above
Explanation :
Devaluation in modern monetary policy is a reduction in the value of a currency with respect to those goods, services or other monetary units with which that currency can be exchanged. There are two implications for currency devaluation. First, de-valuation makes a country's exports relatively less expensive for foreigners and second, it makes foreign products relatively more expensive for domestic consumers, discouraging imports. As a result, this may help to reduce a country's trade deficit. Import substitution means promotion of export to replace imports. It is also fallout of devaluation.
[20] As a result of higher rate of inflation in India, the U.S. dollar will -
A.
Depreciate
B.
Constant
C.
Negligible
D.
Appreciate
Ans:
Appreciate
Explanation :
A relatively higher rate of inflation causing rise in prices of the goods in India as compared to those in the USA will make US goods relatively cheaper and the Indian goods expensive. This will lead to rise in imports of US goods into India and the reduction in Indian exports to the USA that will, in turn, cause the foreign exchange rate of dollar in terms of rupees to rise and the price of Indian rupee in terms of dollar will fall. Thus, as a result of higher rate of inflation in India, the US dollar -will appreciate and the Indian rupee will depreciate.
[21] Which type of foreign investment is considered as unsafe?
A.
Foreign Direct Investment (FDI)
B.
Portfolio Investment
C.
NRI deposits
D.
External commercial borrowing
Ans:
Portfolio Investment
Explanation :
Portfolio Investments are considered unsafe. These are investments in the form of a group (portfolio) of assets, including transactions in equity securities, such as common stock, and debt securities, such as banknotes, bonds, and debentures. Portfolio investments are passive investments, as they do not entail active management or control of the issuing company. Rather, the purpose of the investment is solely financial gain, in contrast to foreign direct investment (FDI), which allows an investor to exercise a certain degree of managerial control over a company.
[22] 'Mixed economy' refers to -
A.
The co-existence of heavy, small scale and cottage industries
B.
The promotion of agriculture as well as cottage industries
C.
The co-existence of rich as well as poor
D.
The co-existence of public as well as private sector
Ans:
the co-existence of public as well as private sector
Explanation :
Mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies.
[23] Golden Handshake Scheme is associated with -
A.
Inviting foreign companies
B.
Private investment in public enterprises
C.
Establishing joint enterprises
D.
Voluntary retirement
Ans:
Voluntary retirement
Explanation :
A golden handshake is a clause in an executive employment contract that provides the executive with a significant severance package in the case that the executive loses his or her job through firing, restructuring, or even scheduled retirement. This can be in the form of cash, equity, and other benefits, and is often accompanied by an accelerated vesting of stock options.
[24] Stagflation is a situation of -
A.
stagnation and deflation
B.
stagnation and recession
C.
stagnation and inflation
D.
stagnation and recovery
Ans:
stagnation and inflation
Explanation :
Stagflation is a situation of stagnation in which the inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high. Stagflation occurs when the economy isn't growing but prices are, which is not a good situation for a country to be in
[25] Devaluation makes import -
A.
Competitive
B.
Inelastic
C.
Cheaper
D.
Dearer
Ans:
Dearer
Explanation :
Devaluation makes import expensive and discourages it, while the export of a country that devalues becomes cheaper and thereby induces trade partners to import more goods from her. Nations that produce industrial goods on a large scale stand to benefit from devaluation.
Explanation :
Managed currency refers to currency whose ex-change rate is not determined by the free-market forces of demand and supply but instead by the government's intervention through the country's central bank.
[18] Which one of the following statements is correct?
A.
Good money drives bad money out of circulation
B.
Bad money drives good money out of circulation
C.
Good and bad money cannot circulate together
D.
Cannot say
Ans:
Bad money drives good money out of circulation
Explanation :
One of the most famous axioms in economics is "bad money drives out good." This rule has generally been attributed to Sir Thomas Gresham (1519-1579), an English financier who advised King Edward VI and Queen Elizabeth I with regard to financial matters, and it is popularly known as Gresham's Law. The key prerequisite is that there must be two forms of money or currency (with the same face value) in circulation simultaneously.
[19] Devaluation of currency leads to -
A.
expansion of export trade
B.
contraction of import trade
C.
expansion of import substitution
D.
All of the above
Ans:
All of the above
Explanation :
Devaluation in modern monetary policy is a reduction in the value of a currency with respect to those goods, services or other monetary units with which that currency can be exchanged. There are two implications for currency devaluation. First, de-valuation makes a country's exports relatively less expensive for foreigners and second, it makes foreign products relatively more expensive for domestic consumers, discouraging imports. As a result, this may help to reduce a country's trade deficit. Import substitution means promotion of export to replace imports. It is also fallout of devaluation.
[20] As a result of higher rate of inflation in India, the U.S. dollar will -
A.
Depreciate
B.
Constant
C.
Negligible
D.
Appreciate
Ans:
Appreciate
Explanation :
A relatively higher rate of inflation causing rise in prices of the goods in India as compared to those in the USA will make US goods relatively cheaper and the Indian goods expensive. This will lead to rise in imports of US goods into India and the reduction in Indian exports to the USA that will, in turn, cause the foreign exchange rate of dollar in terms of rupees to rise and the price of Indian rupee in terms of dollar will fall. Thus, as a result of higher rate of inflation in India, the US dollar -will appreciate and the Indian rupee will depreciate.
[21] Which type of foreign investment is considered as unsafe?
A.
Foreign Direct Investment (FDI)
B.
Portfolio Investment
C.
NRI deposits
D.
External commercial borrowing
Ans:
Portfolio Investment
Explanation :
Portfolio Investments are considered unsafe. These are investments in the form of a group (portfolio) of assets, including transactions in equity securities, such as common stock, and debt securities, such as banknotes, bonds, and debentures. Portfolio investments are passive investments, as they do not entail active management or control of the issuing company. Rather, the purpose of the investment is solely financial gain, in contrast to foreign direct investment (FDI), which allows an investor to exercise a certain degree of managerial control over a company.
[22] 'Mixed economy' refers to -
A.
The co-existence of heavy, small scale and cottage industries
B.
The promotion of agriculture as well as cottage industries
C.
The co-existence of rich as well as poor
D.
The co-existence of public as well as private sector
Ans:
the co-existence of public as well as private sector
Explanation :
Mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies.
[23] Golden Handshake Scheme is associated with -
A.
Inviting foreign companies
B.
Private investment in public enterprises
C.
Establishing joint enterprises
D.
Voluntary retirement
Ans:
Voluntary retirement
Explanation :
A golden handshake is a clause in an executive employment contract that provides the executive with a significant severance package in the case that the executive loses his or her job through firing, restructuring, or even scheduled retirement. This can be in the form of cash, equity, and other benefits, and is often accompanied by an accelerated vesting of stock options.
[24] Stagflation is a situation of -
A.
stagnation and deflation
B.
stagnation and recession
C.
stagnation and inflation
D.
stagnation and recovery
Ans:
stagnation and inflation
Explanation :
Stagflation is a situation of stagnation in which the inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high. Stagflation occurs when the economy isn't growing but prices are, which is not a good situation for a country to be in
[25] Devaluation makes import -
A.
Competitive
B.
Inelastic
C.
Cheaper
D.
Dearer
Ans:
Dearer
Explanation :
Devaluation makes import expensive and discourages it, while the export of a country that devalues becomes cheaper and thereby induces trade partners to import more goods from her. Nations that produce industrial goods on a large scale stand to benefit from devaluation.
Explanation :
Devaluation in modern monetary policy is a reduction in the value of a currency with respect to those goods, services or other monetary units with which that currency can be exchanged. There are two implications for currency devaluation. First, de-valuation makes a country's exports relatively less expensive for foreigners and second, it makes foreign products relatively more expensive for domestic consumers, discouraging imports. As a result, this may help to reduce a country's trade deficit. Import substitution means promotion of export to replace imports. It is also fallout of devaluation.
[20] As a result of higher rate of inflation in India, the U.S. dollar will -
A.
Depreciate
B.
Constant
C.
Negligible
D.
Appreciate
Ans:
Appreciate
Explanation :
A relatively higher rate of inflation causing rise in prices of the goods in India as compared to those in the USA will make US goods relatively cheaper and the Indian goods expensive. This will lead to rise in imports of US goods into India and the reduction in Indian exports to the USA that will, in turn, cause the foreign exchange rate of dollar in terms of rupees to rise and the price of Indian rupee in terms of dollar will fall. Thus, as a result of higher rate of inflation in India, the US dollar -will appreciate and the Indian rupee will depreciate.
[21] Which type of foreign investment is considered as unsafe?
A.
Foreign Direct Investment (FDI)
B.
Portfolio Investment
C.
NRI deposits
D.
External commercial borrowing
Ans:
Portfolio Investment
Explanation :
Portfolio Investments are considered unsafe. These are investments in the form of a group (portfolio) of assets, including transactions in equity securities, such as common stock, and debt securities, such as banknotes, bonds, and debentures. Portfolio investments are passive investments, as they do not entail active management or control of the issuing company. Rather, the purpose of the investment is solely financial gain, in contrast to foreign direct investment (FDI), which allows an investor to exercise a certain degree of managerial control over a company.
[22] 'Mixed economy' refers to -
A.
The co-existence of heavy, small scale and cottage industries
B.
The promotion of agriculture as well as cottage industries
C.
The co-existence of rich as well as poor
D.
The co-existence of public as well as private sector
Ans:
the co-existence of public as well as private sector
Explanation :
Mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies.
[23] Golden Handshake Scheme is associated with -
A.
Inviting foreign companies
B.
Private investment in public enterprises
C.
Establishing joint enterprises
D.
Voluntary retirement
Ans:
Voluntary retirement
Explanation :
A golden handshake is a clause in an executive employment contract that provides the executive with a significant severance package in the case that the executive loses his or her job through firing, restructuring, or even scheduled retirement. This can be in the form of cash, equity, and other benefits, and is often accompanied by an accelerated vesting of stock options.
[24] Stagflation is a situation of -
A.
stagnation and deflation
B.
stagnation and recession
C.
stagnation and inflation
D.
stagnation and recovery
Ans:
stagnation and inflation
Explanation :
Stagflation is a situation of stagnation in which the inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high. Stagflation occurs when the economy isn't growing but prices are, which is not a good situation for a country to be in
[25] Devaluation makes import -
A.
Competitive
B.
Inelastic
C.
Cheaper
D.
Dearer
Ans:
Dearer
Explanation :
Devaluation makes import expensive and discourages it, while the export of a country that devalues becomes cheaper and thereby induces trade partners to import more goods from her. Nations that produce industrial goods on a large scale stand to benefit from devaluation.
Explanation :
Portfolio Investments are considered unsafe. These are investments in the form of a group (portfolio) of assets, including transactions in equity securities, such as common stock, and debt securities, such as banknotes, bonds, and debentures. Portfolio investments are passive investments, as they do not entail active management or control of the issuing company. Rather, the purpose of the investment is solely financial gain, in contrast to foreign direct investment (FDI), which allows an investor to exercise a certain degree of managerial control over a company.
[22] 'Mixed economy' refers to -
A.
The co-existence of heavy, small scale and cottage industries
B.
The promotion of agriculture as well as cottage industries
C.
The co-existence of rich as well as poor
D.
The co-existence of public as well as private sector
Ans:
the co-existence of public as well as private sector
Explanation :
Mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies.
[23] Golden Handshake Scheme is associated with -
A.
Inviting foreign companies
B.
Private investment in public enterprises
C.
Establishing joint enterprises
D.
Voluntary retirement
Ans:
Voluntary retirement
Explanation :
A golden handshake is a clause in an executive employment contract that provides the executive with a significant severance package in the case that the executive loses his or her job through firing, restructuring, or even scheduled retirement. This can be in the form of cash, equity, and other benefits, and is often accompanied by an accelerated vesting of stock options.
[24] Stagflation is a situation of -
A.
stagnation and deflation
B.
stagnation and recession
C.
stagnation and inflation
D.
stagnation and recovery
Ans:
stagnation and inflation
Explanation :
Stagflation is a situation of stagnation in which the inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high. Stagflation occurs when the economy isn't growing but prices are, which is not a good situation for a country to be in
[25] Devaluation makes import -
A.
Competitive
B.
Inelastic
C.
Cheaper
D.
Dearer
Ans:
Dearer
Explanation :
Devaluation makes import expensive and discourages it, while the export of a country that devalues becomes cheaper and thereby induces trade partners to import more goods from her. Nations that produce industrial goods on a large scale stand to benefit from devaluation.
Explanation :
A golden handshake is a clause in an executive employment contract that provides the executive with a significant severance package in the case that the executive loses his or her job through firing, restructuring, or even scheduled retirement. This can be in the form of cash, equity, and other benefits, and is often accompanied by an accelerated vesting of stock options.
[24] Stagflation is a situation of -
A.
stagnation and deflation
B.
stagnation and recession
C.
stagnation and inflation
D.
stagnation and recovery
Ans:
stagnation and inflation
Explanation :
Stagflation is a situation of stagnation in which the inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high. Stagflation occurs when the economy isn't growing but prices are, which is not a good situation for a country to be in
[25] Devaluation makes import -
A.
Competitive
B.
Inelastic
C.
Cheaper
D.
Dearer
Ans:
Dearer
Explanation :
Devaluation makes import expensive and discourages it, while the export of a country that devalues becomes cheaper and thereby induces trade partners to import more goods from her. Nations that produce industrial goods on a large scale stand to benefit from devaluation.
Explanation :
Devaluation makes import expensive and discourages it, while the export of a country that devalues becomes cheaper and thereby induces trade partners to import more goods from her. Nations that produce industrial goods on a large scale stand to benefit from devaluation.