Correct Answer: B) Trade-off between unemployment and inflation
Explanation: The Phillips Curve illustrates the inverse relationship between rates of unemployment and corresponding rates of inflation.
A) Process of incrementally charging off the cost of an asset
B) Adjustment of lending rates by financial institutions
C) Calculation of depreciation in business assets
D) Evaluation of liquid assets in mergers and acquisitions
Correct Answer: A) Process of incrementally charging off the cost of an asset
Explanation: Amortization is the practice of spreading an intangible asset’s cost over that asset’s useful life.
A) Relationship between fiscal deficit and inflation
B) Trade-off between unemployment and inflation
C) Correlation between GDP growth and unemployment
D) Impact of taxation on consumer spending
Correct Answer: B) Trade-off between unemployment and inflation
Explanation: The Phillips Curve illustrates the inverse relationship between rates of unemployment and corresponding rates of inflation.
A) Multinational corporations
B) Private banks
C) National governments
D) Municipal governments
Correct Answer: C) National governments
Explanation: Sovereign bonds are issued by national governments to borrow money.
A) Economic growth
B) A potential recession
C) Immediate inflation
D) Stable interest rates
Correct Answer: B) A potential recession
Explanation: An inverted yield curve, where long-term debts have a lower yield than short-term debt, is often seen as a predictor of economic recession.
A) General Demand Percentage
B) Global Deposit Pooling
C) Government Debt Payment
D) Gross Domestic Product
Correct Answer: D) Gross Domestic Product
Explanation: GDP stands for Gross Domestic Product, which measures the economic performance of a region by calculating the total value of all goods and services produced.
A) Adam Smith
B) John Maynard Keynes
C) Milton Friedman
D) David Ricardo
Correct Answer: A) Adam Smith
Explanation: Adam Smith is often referred to as the father of economics due to his influential works on the nature and causes of the wealth of nations.
A) The profitability of a company
B) The solvency of a bank
C) The ease of converting assets to cash
D) The amount of capital a bank holds
Correct Answer: C) The ease of converting assets to cash
Explanation: In economics, liquidity refers to how quickly and easily an asset can be converted into cash without affecting its market price.
A) The World Bank
B) The International Monetary Fund
C) The United Nations
D) The World Trade Organization
Correct Answer: B) The International Monetary Fund
Explanation: The International Monetary Fund publishes the World Economic Outlook, which assesses global economic trends and prospects.
A) High inflation and high unemployment
B) High inflation and high growth
C) Low inflation and low unemployment
D) Low inflation and high unemployment
Correct Answer: A) High inflation and high unemployment
Explanation: Stagflation is an economic condition marked by both high inflation and high unemployment, presenting a challenge for economic policy.
A) Falling stock prices
B) Rising stock prices
C) Stagnant stock prices
D) Volatile stock prices
Correct Answer: B) Rising stock prices
Explanation: A bull market refers to a financial market of a group of securities in which prices are rising or are expected to rise.
A) Policy on currency management
B) Foreign trade management
C) Banking regulations
D) Government spending and taxation
Correct Answer: D) Government spending and taxation
Explanation: Fiscal policy involves government spending and taxation to influence the economy.
A) To provide loans to developing countries
B) To regulate global financial markets
C) To oversee global trade agreements
D) To manage global gold reserves
Correct Answer: C) To oversee global trade agreements
Explanation: The WTO is responsible for overseeing global trade agreements and ensuring that trade flows as smoothly and freely as possible.
A) Fiscal flow
B) Capital stock
C) Money supply
D) Credit line
Correct Answer: C) Money supply
Explanation: Money supply refers to the total volume of money circulating within an economy at any given time.
A) GDP
B) CPI
C) GNP
D) PPI
Correct Answer: A) GDP
Explanation: GDP, or Gross Domestic Product, measures economic activity based on the total value of all goods and services produced over a specific time period.
A) Stock market investments
B) Economic growth
C) Export rates
D) Interest rates
Correct Answer: B) Economic growth
Explanation: Quantitative easing is a monetary policy used by central banks to stimulate the economy by increasing the money supply.
A) When a country’s imports exceed its exports
B) When a country’s exports exceed its imports
C) When trade exactly balances
D) When a country does not engage in trade
Correct Answer: B) When a country’s exports exceed its imports
Explanation: A trade surplus occurs when a country exports more than it imports, indicating a net inflow of domestic currency from foreign markets.
A) Price increase leads to demand decrease
B) Price increase leads to demand increase
C) Demand is independent of price
D) Demand decreases as supply decreases
Correct Answer: A) Price increase leads to demand decrease
Explanation: The law of demand states that, all else being equal, as the price of a product increases, quantity demanded decreases, and vice versa.
A) They only issue government bonds
B) They primarily deal with stock investments
C) They facilitate the flow of capital
D) They regulate monetary policies
Correct Answer: C) They facilitate the flow of capital
Explanation: Commercial banks play a critical role in the economy by accepting deposits, granting loans, and facilitating the flow of capital from savers to borrowers.
A) The Finance Minister
B) The Governor of RBI
C) SEBI
D) The Indian President
Correct Answer: B) The Governor of RBI
Explanation: The bank rate is set by the Reserve Bank of India under the guidance of its Governor. This rate significantly influences the economy’s liquidity and banking sector.
A) MSME Act, 2006
B) Companies Act, 2013
C) Industrial Dispute Act, 1947
D) MSME Development Act, 2006
Correct Answer: D) MSME Development Act, 2006
Explanation: The MSME Development Act, 2006, facilitates the promotion, development, and enhancement of competitiveness of micro, small, and medium enterprises.
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