CURRENCY INFLATION MCQS SET 17

CURRENCY INFLATION MCQS SET 17

161) A rapid increase in the rate of inflation is sometimes attributed to the 'Base Effect'. What is the 'Base Effect' ?
A) It is the impact of drastic deficiency in supply due to failure of crops.
B) It is the impact of the surge in demand due to rapid economic growth.
C) It is the impact of price levels of the previous year on the calculation of inflation rate.
D) None of the above
Correct Answer: It is the impact of price levels of the previous year on the calculation of inflation rate.
   
162) Which of the following statements is/are correct?
1. High growth will led to inflation.
2. High growth will lead to deflation.
Select the correct answer using the codes given below
A) Only 1
B) Only 2
C) Both 1 and 2
D) Neither 1 nor 2
Correct Answer: Only 1
   
163) Consider the following factors
1. Deficit financing
2. Black money in an economy
3. High rate of population growth
Which of the factors given above are responsible for the Demand Pull inflation in an economy?
A) 1 and 2
B) 1 and 3
C) 2 and 3
D) All of these
Correct Answer: All of these
   
164) Consider the following statements about the Inflation
1. Inflation can lead to inequality in the distribution of income in an economy.
2. Inflation can lead to recession in the many sectors of an economy.
Which of the statements given above is/are correct?
A) Only 1
B) Only 2
C) Both 1 and 2
D) Neither 1 nor 2
Correct Answer: Both 1 and 2
   
165) To convert GDP at market prices into factor cost we need to
A) deduct indirect taxes and added subsidies from it
B) subtract subsidies from it and add indirect taxes to it
C) deduct indirect taxes and subsidies from it
D) deduct weight of inflation for the period from it
Correct Answer: deduct indirect taxes and added subsidies from it

166) Consider the following services/ goods
1. Police
2. National defence
3. Tax subsidies
Which of the services/goods given above is/are included in the 'public goods' of an economy?
A) 1 and 2
B) 1 and 3
C) 2 and 3
D) Only 2
Correct Answer: 1 and 2
   
167) Which one of the following has been the main measure of the rate of inflation in India?
A) Consumer Price Index
B) Consumer Price Index-Industrial worker
C) Consumer Price Index-Agricultural labour
D) Wholesale Price Index
Correct Answer: Wholesale Price Index
   
168) Consider the following statements
1. Disinflation is a decrease in the rate of inflation.
2. In the disinflation, the inflation is falls below the zero per cent level.
Which of the statements given above is/are correct?
A) Only 1
B) Only 2
C) Both 1 and 2
D) Neither 1 nor 2
Correct Answer: Only 1
   
169) The existence of a parallel economy/ black money
A) makes the economy more competitive.
B) makes the monetary policies less effective.
C) ensures a better distribution of income and wealth.
D) ensures increasing productive investment.
Correct Answer: makes the monetary policies less effective.
   
170) Which one of the following is related with the core inflation of an economy?
A) Inflation which excludes certain items that face volatile price movements
B) Inflation which includes certain items that face volatile price movements
C) Inflation due to rise in the production of non agricultural products
D) Both 'a' and 'b'
Correct Answer: Inflation which excludes certain items that face volatile price movements