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Prelims-IAS –ECONOMICS MCQ-18

1..Which of the following are the possible impacts of inflation?

  1. investment is boosted in the short-run.
  2. savings decline in the long-run.
  3. borrowers suffer and lenders benefit out of inflation.

Which of the following statements is/are correct?

(a)  Only 3
(b)  1 and 2
(c)  Only 2
(d)  1, 2 and 3


2..Consider the following statements:

  1. Skewflation is a combination of high inflation and low growth.
  2. Stagflation is one in which there is a price rise of one or a small group of commodities over a sustained period of time.
  3. Reflation is a situation often deliberately brought by the government to reduce unemployment and increase demand by going for higher levels of economic growth.

Which of the statements given above is/are incorrect?

(a) 1 only
(b) 3 only
(c )1 and 2 only(d) 1, 2 and 3


3..What is inflation targeting?

(a)  It is an economic policy whereby the government targets a specific rate beyond which the inflation should not proceed.
(b)  It is an economic policy whereby the central bank targets a specific rate of inflation and then steers the actual rate of inflation towards it by means of monetary policy instruments.
(c)  It is an economic policy whereby both the central government and the central bank target a specific rate of inflation beyond which it should not proceed.
(d)  It is an economic policy whereby the market forces are allowed to target the inflation rate without any interference of the central bank or the government.


4..Which of the following steps will lead to inflation in India?

  1. The price of crude oil rising in the international markets.
  2. Increase in the government expenditure particularly the non plan expenditure.
  3. A deficit monsoon leading to poor food crops.
  4. RBI increasing the repo rate.

Select the correct answer from the following codes.
(a) 2 only
(b) 2 and 3 only
(c) 4 only
(d) 1, 2 and 3 only


5..Which of the following can be a way to control inflation for certain commodities?

  1. Reducing import duty
  2. Increasing Minimum Export Price
  3. Increasing limit of export quota

Select the correct answer using the code given below.

(a)  1 and 2 only
(b)  1 and 3 only
(c)  2 and 3 only
(d)  1, 2 and 3


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