Indian Economy -Test Set 3

(1). Which of the following are definite implications of a fall in inflation?
1. Prices have fallen
2. Prices are increasing more slowly than before
3. Food supply has increased
4. There is industrial stagnation
(a) 1 and 3
(b) 1 only
(c) 2 only
(d) 1, 3 and 4

Ans: (c)

(2). Among the causes of inflation can be listed:
1. slow growth in agricultural output
2. increasing non-development expenditure of Government
3. rapid population growth
4. rapid growth in costly imports
(a) 1 and 2
(b) 2 and 3
(c) 1, 2, 3 and 4
(d) 1 and 4 only

Ans: (c)

3. Among the remedies of inflation we cannot include:
(a) better capacity utilisation
(b) lowering bank rate
(c) reducing budgetary deficit
(d) an efficient public distribution system

Ans: (b)

4. A very rapid growth in prices in which money loses its value to the point where even barter may be preferable is known as:
(a) inflation
(b) hyper-inflation
(c) deflation
(d) disinflation

Ans: (b)




5. Inflationary Gap is a situation characterized by:
(a) excess of Aggregate Demand over Aggregate Supply at the full employment level
(b) gap between Galloping Inflation and Runaway Inflation
(c) Inflation coupled with recession
(d) Inflation that usually prevails in a developing country

Ans: (a)

6. Which of the following is wrongly matched?
(a) Depression: Insufficient demand causing large scale unemployment of men and machinery over a long period of time
(b) Recession: Reduction in demand and production/ investment over a short period of time
(c) Stagflation: slow pace of economic activity due to falling prices
(d) Boom: Rapid and all-round spurt in economic activity

Ans: (c)

7. The cause of inflation is:
(a) increase in money supply
(b) fall in production
(c) increase in money supply and fall in production
(d) decrease in money supply and fall in production

Ans: (c)

8. Who among the following is most benefitted from inflation? [IAS 1989]
(a) Government pensioners
(b) Creditors
(c) Savings Bank Account holders
(d) Debtors

Ans: (d)

9. Which of the following groups suffer the most from inflation? [CPO SI 2003]
(a) Debtors
(b) Creditors
(c) Business class
(d) Holders of real assets

Ans: (b)



10. Minimum inflation in post economic reform was in :
(a) 1999-2000
(b) 2000-01
(c) 2001-02
(d) 2002-03

Ans: (a)

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