Question 1

In the last one decade, which one among the following sectors has attracted the highest foreign direct investment inflows into India?

Accepted Answer

Telecommunications

Question 2

When the demand for a good increases with an increase in income, such a good is called_______

Accepted Answer

Superior good

Question 3

The demand of a commodity is a direct demand but the demand of a factor of production is called a

Accepted Answer

Derived demand

Question 4

Depreciation is loss in value of ________

Accepted Answer

Machinery

Question 5

Government has announced to fix MSP at a level of at least ________________ per cent of the cost of production for kharif crops 2018-19 which redeems the promise made in the Union Budget for 2018-19.

Accepted Answer

Government has announced its historic decision on 04.07.2018 to fix MSP at a level of at least 150 per cent of the cost of production for kharif crops 2018-19 which redeems the promise made in the Union Budget for 2018-19.The MSPs fixed by Government, cost and returns over all-India weighted average cost of production of crops for 2017-18 and 2018-19 is at Annexure.Cost of production varies in different states on account of difference in levels of irrigation, resource endowment, farm mechanization, land holding size, yield of crops etc.

Question 6

The difference between exports and imports is called-?

Accepted Answer

The difference between exports and imports is called the balance of trade. If imports are greater than exports, it is sometimes called an unfavourable balance of trade. If exports exceed imports, it is sometimes called a favourable balance of trade.

Question 7

The Law of Demand is based on the concept that people _______.

Accepted Answer

buy more of a good as the price of the good falls.

Question 8

What does 'C' stands for 'CAGR', a business specific term for the geometric progression ratio that provides a constant rate over the specific time period?

Accepted Answer

CAGR stands for Compound Annual Growth Rate. So, C stands for Compound. Compound annual growth rate (CAGR) is a business and investing specific term for the geometric progression ratio that provides a constant rate of return over the time period.

Question 9

PMVVY (Pradhan Mantri Vaya Vandana Yojana) pension limit extends to which timeline?

Accepted Answer

PMVVY (Pradhan Mantri Vaya Vandana Yojana) pension limit extends to March, 2020. The Union Cabinet, chaired by Prime Minister Narendra Modi approved extending the investment limit from Rs 7.5 lakh to Rs 15 lakh under the Pradhan Mantri Vaya Vandana Yojana (PMVVY). It also extended the last date for a subscription to the scheme till March 31, 2020. The time limit was earlier supposed to end on May 4, 2018. The PMVVY is being implemented through Life Insurance Corp (LIC) to provide social security during old age and protect the elderly aged 60 years and above against a future fall in their interest income due to uncertain market conditions. The scheme provides an assured pension based on a guaranteed rate of return of 8 percent per annum for 10 years.

Question 10

The Certificate of Deposit (CD) is a negotiable money market instrument and issued in the form of?

Accepted Answer

The Certificate of Deposit (CD) is a negotiable money market instrument and issued in dematerialised form or as a Usance Promissory Note against funds deposited at a bank or other eligible financial institution for a specified time period. (Usance Promissory Note has to be paid after certain time period).

Question 11

A company faces a -2.5 price elasticity of demand for its product. It is presently selling 10,000 units/month. If it wants to increase quantity sold by 6%, it must lower its price by

Accepted Answer

2.40%

Question 12

Lowering of value of currency relative to a foreign reference currency is called _________.

Accepted Answer

Devaluation

Question 13

Movement along the supply curve is known as ______

Accepted Answer

Expansion and contraction of supply

Question 14

India's population growth is characterized by

Accepted Answer

An increase in the birth rate and declining death rate

Question 15

Which one of the following with regard to the term ‘bank run’ is correct?

Accepted Answer

A bank run occurs when a large number of people withdraw their money from a bank, because they believe the bank may cease to function soon. A banking panic or bank panic is a financial crisis that occurs when many banks suffer runs at the same time, as people suddenly try to convert their threatened deposits into cash or try to get out of their domestic banking system altogether.

Question 16

Which of the following will be the outcome if an economy is under the inflationary pressure? 1.Domestic currency heads for depreciation. 2.Exports become less competitive with imports getting costlier. 3.Cost of borrowing decreases.4.Bondholders get…

Accepted Answer

Creditors and debtors: During inflation creditors lose because they receive in effect less in goods and services than if they had received the repayments during a period of low prices. Debtors, on other hand, as a group gain during inflation, since they repay their debts in currency that has lost its value.The aggregate volume of internal trade tends to increase during inflation due to higher incomes, greater production and larger spending. But the export trade is likely to suffer on account of arise in the prices of domestic goods. The same currency unit will now buy less goods and services.But the bondholders lose as they get a fixed interest the real value of which has already fallen.

Question 17

Capital deepening refers to

Accepted Answer

Capital deepening is a situation where the capital per worker is increasing in the economy. This is also referred to as increase in the capital intensity. Capital deepening is often measured by the rate of change in capital stock per labour hour.

Question 18

Which one of the following is not an assumption in the law of demand?

Accepted Answer

There are certain assumptions underlying the law of demand, which are as follows: i. Assumes that the consumer’s income remains same ii. Assumes that the preferences of consumer remain same. iii. Considers that the fashion does not show any changes, because if fashion changes, then people would not purchase the products that are out of fashion. iv. Assumes that there would be no change in the age structure, size, and sex ratio of population. This is because if population size increases, then the number of buyers increases, which, in turn, affect the demand for a product directly. v. Restricts the innovation and new varieties of products in the market, which can affect the demand for the existing product. vi. Restricts changes in the distribution of income. vii. Avoids any type of change fiscal policies of the government of a nation, which reduces the effect of taxation on the demand of product.

Question 19

Which one of the following statements is not correct?

Accepted Answer

Total utility -It is total psychological satisfaction which a consumer derives from the consumption of a commodity is known as total utility Marginal utility -It is anaddition made in total utility by consuming and additional unit of a commodity is known as marginal utility. •When marginal utility is positive,total utility increases •When marginal utility is zero,total utility is at maximum •When marginal utility is negative,total utility decreases

Question 20

Consider the following statements about indifference curves: 1. Indifference curves are convex to the origin. 2. Higher indifference curve represents higher level of satisfaction. 3. Two indifference curves cut each other.Which of the statements giv…

Accepted Answer

The indifference curves cannot intersect each other. Higher indifference curve represents a higher level of satisfaction because higher IC means a bundle consisting more of both the goods or same quantity of one good n more quantity of the other good .Hence statement 2 is correct and 3 is incorrect. Indifference curves is convex to the point of origin because of diminishing Marginal Rate of Substitution.

Indian Economy Questions