MCQs on Physics [Set – 5]

MCQs on Physics [Set – 5] 1. What phenomenon is responsible for the auroras (Northern and Southern Lights)? A) Solar winds interacting with the Earth’s magnetosphereB) Moonlight reflecting off of ice crystals in the atmosphereC) Sunlight refracting through the Earth’s atmosphere at the polesD) Meteor particles burning up in the Earth’s atmosphere Show Answer Correct Answer: A) Solar winds interacting with the Earth’s magnetosphereExplanation: Auroras, or the Northern and Southern Lights, occur when charged particles from the solar wind interact with the Earth’s magnetic field, causing the particles to glow as they collide with atoms in the Earth’s atmosphere. 2. Which optical device is used to produce a magnified image of small objects? A) TelescopeB) MicroscopeC) PeriscopeD) Kaleidoscope Show Answer Correct Answer: B) MicroscopeExplanation: A microscope is an optical instrument used to view small objects in great detail, producing a magnified image through lenses or a combination of lenses. 3. What type of wave is sound? A) TransverseB) LongitudinalC) ElectromagneticD) Gravitational Show Answer Correct Answer: B) LongitudinalExplanation: Sound waves are longitudinal waves where the particle displacement is parallel to the direction of wave propagation. 4. What is the primary source of Earth’s magnetic field? A) The SunB) The MoonC) The Earth’s rotating coreD) Cosmic radiation Show Answer Correct Answer: C) The Earth’s rotating coreExplanation: Earth’s magnetic field is primarily generated by electric currents in the planet’s molten outer core, which is composed of conducting materials such as iron and nickel. 5. Which effect describes the bending of a wave around an obstacle or the edges of an opening? A) The Doppler EffectB) The Compton EffectC) The Diffraction EffectD) The Photoelectric Effect Show Answer Correct Answer: C) The Diffraction EffectExplanation: Diffraction occurs when a wave encounters an obstacle or a slit that is comparable in size to its wavelength, which causes the wave to bend around the obstacle or through the slit. 6. What is the change in frequency of a wave for an observer moving relative to the source of the wave? A) The Doppler EffectB) The Compton EffectC) The Diffraction EffectD) The Photoelectric Effect Show Answer Correct Answer: A) The Doppler EffectExplanation: The Doppler Effect is the change in frequency of a wave in relation to an observer who is moving relative to the wave source. It is commonly heard in the change of pitch of a siren as it moves towards or away from an observer. 7. What do you call the process by which a liquid changes to a gas at temperatures below its boiling point throughout the bulk of the liquid? A) EvaporationB) CondensationC) DepositionD) Sublimation Show Answer Correct Answer: A) EvaporationExplanation: Evaporation is the process where molecules at the surface of a liquid absorb enough energy to change into the gaseous state below the boiling point, occurring throughout the bulk of the liquid. 8. Which principle asserts that the pressure exerted by a fluid decreases as the speed of the fluid increases? A) Archimedes’ PrincipleB) Bernoulli’s PrincipleC) Pascal’s PrincipleD) Joule’s Law Show Answer Correct Answer: B) Bernoulli’s PrincipleExplanation: Bernoulli’s Principle states that for an inviscid flow, an increase in the speed of the fluid occurs simultaneously with a decrease in pressure or a decrease in the fluid’s potential energy. 9. What unit is used to measure the intensity of radioactivity? A) CurieB) RutherfordC) BecquerelD) Newton Show Answer Correct Answer: C) BecquerelExplanation: The becquerel is the SI derived unit used to measure the activity of a quantity of radioactive material, which is one disintegration per second. 10. Which type of current is produced by solar panels? A) Direct Current (DC)B) Alternating Current (AC)C) Pulsating CurrentD) Static Current Show Answer Correct Answer: A) Direct Current (DC)Explanation: Solar panels produce direct current (DC), where the electric charge flows in one direction. This DC can be converted to alternating current (AC) using an inverter for household or commercial use. 11. What is the phenomenon of light being scattered in multiple directions as it passes through a medium? A) ReflectionB) RefractionC) DiffusionD) Dispersion Show Answer Correct Answer: C) DiffusionExplanation: Diffusion of light occurs when light is scattered in many directions as it passes through a medium. This is due to the interactions of light with particles and imperfections within the medium. 12. What is it called when a gas changes directly into a solid without passing through the liquid phase? A) SublimationB) DepositionC) CondensationD) Evaporation Show Answer Correct Answer: B) DepositionExplanation: Deposition is the phase transition in which gas transforms into solid without passing through the liquid phase. This process is the reverse of sublimation. 13. Which law states that the sum of the currents entering a junction must equal the sum of the currents leaving the junction? A) Ohm’s LawB) Kirchhoff’s Current LawC) Kirchhoff’s Voltage LawD) Faraday’s Law of Electromagnetic Induction Show Answer Correct Answer: B) Kirchhoff’s Current LawExplanation: Kirchhoff’s Current Law states that the total current entering a junction or node in a circuit must equal the total current leaving the node, as charge cannot accumulate at the node. 14. What happens to the pressure of a gas if its volume is halved and its temperature is doubled, assuming the amount of gas is kept constant? A) It doublesB) It quadruplesC) It halvesD) It stays the same Show Answer Correct Answer: B) It quadruplesExplanation: According to the combined gas law (P1V1/T1 = P2V2/T2), if the volume is halved and the temperature is doubled, the pressure of the gas quadruples. 15. What do you call the lowest point in a wave? A) TroughB) CrestC) AmplitudeD) Wavelength Show Answer Correct Answer: A) TroughExplanation: The trough is the lowest point of a wave, the point where the displacement of the medium is at its lowest. 16. What is defined as the distance between successive crests of a wave, especially points in a sound wave or electromagnetic wave? A) AmplitudeB) FrequencyC) WavelengthD) Velocity Show Answer Correct Answer: C) WavelengthExplanation: Wavelength is the distance between successive crests (or troughs) of a wave. It is a key characteristic of both sound and electromagnetic waves. 17. Which instrument measures electrical resistance? A) AmmeterB) VoltmeterC) OhmmeterD) Galvanometer Show Answer Correct Answer:

MCQs on Physics [Set – 4]

MCQs Static GK, MCQs Physics

MCQs on Physics [Set – 4] 1. What device uses the photoelectric effect to detect and measure light intensity? A) PhotodiodeB) Light meterC) Photovoltaic cellD) Solar panel Show Answer Correct Answer: A) PhotodiodeExplanation: A photodiode is a semiconductor device that converts light into an electrical current. It uses the photoelectric effect to measure light intensity. 2. What is the ability of a material to return to its original shape after being stretched or compressed called? A) ElasticityB) PlasticityC) DuctilityD) Brittleness Show Answer Correct Answer: A) ElasticityExplanation: Elasticity is the property of a material that allows it to return to its original shape after being deformed. Materials that do not return to their original shape are called plastic. 3. Which law states that the internal energy of an ideal gas is solely a function of its temperature? A) Charles’s LawB) Boyle’s LawC) Gay-Lussac’s LawD) Joule’s Law Show Answer Correct Answer: D) Joule’s LawExplanation: Joule’s Law states that the internal energy of an ideal gas is solely dependent on its temperature, irrespective of volume and pressure. 4. What type of image is formed by a flat mirror? A) Real and invertedB) Virtual and invertedC) Real and uprightD) Virtual and upright Show Answer Correct Answer: D) Virtual and uprightExplanation: A flat mirror forms a virtual and upright image. This image cannot be projected on a screen and appears to be behind the mirror. 5. What is the inverse relationship between the pressure and volume of a gas called? A) Charles’s LawB) Boyle’s LawC) Gay-Lussac’s LawD) Avogadro’s Law Show Answer Correct Answer: B) Boyle’s LawExplanation: Boyle’s Law states that the pressure of a given mass of an ideal gas is inversely proportional to its volume when temperature remains constant. 6. What occurs when the nucleus of an atom splits into smaller parts? A) FusionB) FissionC) Radioactive decayD) Ionization Show Answer Correct Answer: B) FissionExplanation: Nuclear fission is a reaction in which the nucleus of an atom splits into two or more smaller nuclei, releasing a large amount of energy and often neutrons. 7. Which quantity is defined as the rate of doing work? A) MomentumB) EnergyC) ForceD) Power Show Answer Correct Answer: D) PowerExplanation: Power is defined as the rate of doing work or the rate of energy transfer. It is usually measured in watts (W), where one watt is one joule per second. 8. What is the name of the temperature scale that starts at absolute zero? A) CelsiusB) FahrenheitC) KelvinD) Rankine Show Answer Correct Answer: C) KelvinExplanation: The Kelvin scale is an absolute temperature scale starting at absolute zero, the theoretical lowest possible temperature. 9. Which type of mirror can create a real image? A) Flat mirrorB) Convex mirrorC) Concave mirrorD) Both convex and concave mirrors Show Answer Correct Answer: C) Concave mirrorExplanation: Concave mirrors can create real images when the object is placed beyond the focal point. These images are inverted and can be projected onto a screen. 10. What principle explains the behavior of a fluid moving through a pipe of varying diameter? A) Pascal’s LawB) Bernoulli’s PrincipleC) Archimedes’ PrincipleD) Boyle’s Law Show Answer Correct Answer: B) Bernoulli’s PrincipleExplanation: Bernoulli’s Principle states that an increase in the speed of a fluid occurs simultaneously with a decrease in pressure or a decrease in the fluid’s potential energy. 11. Which phenomenon is observed when light is transmitted through a narrow slit? A) ReflectionB) RefractionC) DiffractionD) Dispersion Show Answer Correct Answer: C) DiffractionExplanation: Diffraction occurs when light passes through a narrow slit and spreads out. It is most noticeable when the size of the aperture is about the same as the wavelength of the light. 12. What is it called when a solid turns directly into a gas, bypassing the liquid state? A) SublimationB) DepositionC) EvaporationD) Condensation Show Answer Correct Answer: A) SublimationExplanation: Sublimation is the transition of a substance directly from the solid to the gas phase, skipping the liquid state. Examples include dry ice and snow in cold climates. 13. Which gas law is represented by the formula PV = nRT? A) Charles’s LawB) Boyle’s LawC) Ideal Gas LawD) Avogadro’s Law Show Answer Correct Answer: C) Ideal Gas LawExplanation: The Ideal Gas Law, represented by the equation PV = nRT, relates the pressure, volume, temperature, and amount of an ideal gas, where P is pressure, V is volume, n is the amount of substance, R is the universal gas constant, and T is temperature. 14. Which effect describes the splitting of a spectral line into several components in the presence of a static magnetic field? A) Zeeman EffectB) Stark EffectC) Photoelectric EffectD) Compton Effect Show Answer Correct Answer: A) Zeeman EffectExplanation: The Zeeman Effect involves the splitting of a spectral line into several components in the presence of a static magnetic field. It is named after the Dutch physicist Pieter Zeeman. 15. What is the term used for the energy stored in an object due to its position or arrangement? A) Kinetic energyB) Thermal energyC) Potential energyD) Mechanical energy Show Answer Correct Answer: C) Potential energyExplanation: Potential energy is the energy that an object holds due to its position relative to other objects, stresses within itself, its electric charge, or other factors. 16. What principle does a periscope operate on? A) RefractionB) ReflectionC) DiffractionD) Polarization Show Answer Correct Answer: B) ReflectionExplanation: A periscope operates on the principle of reflection, using mirrors to reflect light from one place to another, allowing one to see over or around obstacles. 17. Which type of optical phenomenon occurs when light rays pass close to a massive object, causing them to bend due to gravity? A) Gravitational LensingB) Black Hole EvaporationC) Neutron Star OscillationD) Pulsar Timing Show Answer Correct Answer: A) Gravitational LensingExplanation: Gravitational lensing occurs when light from a distant object, such as a galaxy or star, is bent around a massive object between the light source and the observer. 18. What is the main difference between fusion and fission? A) Fusion involves combining nuclei, while fission involves splitting nucleiB) Fusion emits more energy than fissionC) Fusion can only occur at high temperaturesD) All of the above Show Answer Correct Answer:

MCQs on Physics [Set – 3]

MCQs Static GK, MCQs Physics

MCQs on Physics [Set – 3] 1. Which concept in physics explains the behavior of very cold atoms? A) ThermodynamicsB) Quantum MechanicsC) Classical MechanicsD) Electrodynamics Show Answer Correct Answer: B) Quantum MechanicsExplanation: Quantum mechanics is the branch of physics that explains the behavior of particles at very small scales, including the behavior of atoms at very low temperatures. 2. What property of sound is primarily affected by temperature? A) PitchB) LoudnessC) SpeedD) Timbre Show Answer Correct Answer: C) SpeedExplanation: The speed of sound is affected by the temperature of the medium through which it travels. Higher temperatures typically increase the speed of sound in air. 3. In which device is the principle of the conservation of momentum applied? A) Electric MotorB) RefrigeratorC) RocketD) Battery Show Answer Correct Answer: C) RocketExplanation: Rockets operate on the principle of conservation of momentum. The momentum of the ejected exhaust gas from a rocket in one direction gives an equal and opposite momentum to the rocket itself. 4. What is the primary cause of tides in the earth’s oceans? A) WindB) SunC) MoonD) Centrifugal force Show Answer Correct Answer: C) MoonExplanation: The primary cause of tides in Earth’s oceans is the gravitational pull of the moon, which pulls the water towards it, creating tidal forces. 5. What type of circuit prevents the flow of direct current while allowing alternating current to pass? A) ResistorB) CapacitorC) InductorD) Transformer Show Answer Correct Answer: B) CapacitorExplanation: A capacitor blocks direct current (DC) but allows alternating current (AC) to pass through it, making it an essential component in various electronic circuits. 6. Who is credited with the invention of the dynamo? A) Thomas EdisonB) Nikola TeslaC) Michael FaradayD) James Watt Show Answer Correct Answer: C) Michael FaradayExplanation: Michael Faraday is credited with the invention of the dynamo, which is a device that converts mechanical energy into electrical energy. 7. Which instrument is used to measure atmospheric pressure? A) AnemometerB) BarometerC) HygrometerD) Thermometer Show Answer Correct Answer: B) BarometerExplanation: A barometer is used to measure atmospheric pressure. It is a crucial tool in meteorology for weather prediction. 8. What phenomenon results from the interference of light waves from different coherent sources? A) PolarizationB) RefractionC) DiffractionD) Interference Show Answer Correct Answer: D) InterferenceExplanation: Interference is a phenomenon in which two waves superpose to form a resultant wave of greater, lower, or the same amplitude. 9. What is the change in direction of a wave passing from one medium to another called? A) ReflectionB) RefractionC) DiffractionD) Dispersion Show Answer Correct Answer: B) RefractionExplanation: Refraction is the change in direction of a wave passing from one medium to another caused by its change in speed. 10. What is it called when light changes direction as it passes at an angle from one medium to another? A) ReflectionB) RefractionC) AbsorptionD) Scattering Show Answer Correct Answer: B) RefractionExplanation: Refraction occurs when light waves change direction due to passing through different mediums at an angle, altering their speed. 11. What term describes the bending of light waves around obstacles? A) ReflectionB) RefractionC) DiffractionD) Dispersion Show Answer Correct Answer: C) DiffractionExplanation: Diffraction refers to the bending of light waves around obstacles and the spreading out of waves past small openings. 12. Which law states that equal volumes of all gases, at the same temperature and pressure, contain the same number of molecules? A) Charles’s LawB) Gay-Lussac’s LawC) Boyle’s LawD) Avogadro’s Law Show Answer Correct Answer: D) Avogadro’s LawExplanation: Avogadro’s Law states that equal volumes of all gases, at the same temperature and pressure, contain the same number of molecules. 13. What device converts electrical energy into mechanical energy? A) GeneratorB) MotorC) BatteryD) Transformer Show Answer Correct Answer: B) MotorExplanation: An electric motor converts electrical energy into mechanical energy, typically by electromagnetic interactions. 14. What is the SI unit of luminous intensity? A) CandelaB) LuxC) LumenD) Watt Show Answer Correct Answer: A) CandelaExplanation: The candela is the SI unit of luminous intensity; it measures the perceived power emitted by a light source in a particular direction. 15. Which physicist introduced the concept of contact electrification? A) Albert EinsteinB) Charles-Augustin de CoulombC) Benjamin FranklinD) Alessandro Volta Show Answer Correct Answer: C) Benjamin FranklinExplanation: Benjamin Franklin introduced the concept of contact electrification, which involves the transfer of electric charge between two materials when they are brought into contact and then separated. 16. Which of the following is not a vector quantity? A) VelocityB) AccelerationC) EnergyD) Force Show Answer Correct Answer: C) EnergyExplanation: Energy is a scalar quantity because it does not have a direction associated with it, unlike vector quantities such as velocity, acceleration, and force. 17. What is the phenomenon of an electron emitting from a metal surface due to heat called? A) Photoelectric effectB) Compton scatteringC) Cathode ray emissionD) Thermionic emission Show Answer Correct Answer: D) Thermionic emissionExplanation: Thermionic emission is the release of electrons from a heated metal surface, an effect used in vacuum tubes and cathode ray tubes. 18. What principle is used to measure the speed of an object using the Doppler effect? A) Bernoulli’s principleB) Archimedes’ principleC) Doppler radarD) Radar gun Show Answer Correct Answer: C) Doppler radarExplanation: Doppler radar utilizes the Doppler effect to measure the speed of an object by analyzing the change in frequency of the returned radar signal. 19. Which law states that the induced electromotive force in any closed circuit is equal to the rate of change of the magnetic flux through the circuit? A) Ohm’s LawB) Faraday’s Law of emiC) Lenz’s LawD) Kirchhoff’s Voltage Law Show Answer Correct Answer: B) Faraday’s Law of emiExplanation: Faraday’s Law of Electromagnetic Induction states that the induced electromotive force in any closed circuit is equal to the rate of change of the magnetic flux through the circuit, a fundamental principle in electromagnetism. 20. What is the measure of the total amount of kinetic energy due to molecular motion in a substance? A) HeatB) TemperatureC) EnergyD) Entropy Show Answer Correct Answer: A) HeatExplanation: Heat is the transfer of thermal energy from one system to another and is a measure of the total kinetic energy of particles in a substance. ! Report Error

MCQs on Physics [Set – 2]

MCQs Static GK, MCQs Physics

MCQs on Physics [Set – 2] 1. Which effect describes the bending of light due to gravity? A) Doppler EffectB) Photoelectric EffectC) Gravitational LensingD) Quantum Tunneling Show Answer Correct Answer: C) Gravitational LensingExplanation: Gravitational lensing is a phenomenon that occurs when a massive object causes a distortion in space-time, which bends the path of light passing near it. This effect is one of the predictions of Albert Einstein’s general theory of relativity. 2. What property of a wave is measured in cycles per second? A) AmplitudeB) FrequencyC) WavelengthD) Velocity Show Answer Correct Answer: B) FrequencyExplanation: The frequency of a wave is the number of cycles (or oscillations) of the wave that pass a fixed point in one second, measured in hertz (Hz). 3. Which of the following particles is a fermion? A) PhotonB) GluonC) ElectronD) Meson Show Answer Correct Answer: C) ElectronExplanation: Electrons are fermions, a type of particles that follow Fermi-Dirac statistics and are subject to the Pauli exclusion principle, which states that no two fermions can occupy the same quantum state simultaneously. 4. What does the ‘C’ in Einstein’s famous equation E=mc² stand for? A) ConstantB) Conversion factorC) CelsiusD) Speed of light Show Answer Correct Answer: D) Speed of lightExplanation: In the equation E=mc², ‘C’ represents the speed of light in a vacuum, which is approximately 299,792,458 meters per second. The equation shows that mass and energy are interchangeable. 5. Which is the correct sequence of electromagnetic spectrum from shortest to longest wavelength? A) Radio, Microwave, Infrared, Visible, Ultraviolet, X-rays, Gamma raysB) Gamma rays, X-rays, Ultraviolet, Visible, Infrared, Microwave, RadioC) Ultraviolet, X-rays, Gamma rays, Visible, Infrared, Microwave, RadioD) X-rays, Ultraviolet, Visible, Infrared, Microwave, Radio, Gamma rays Show Answer Correct Answer: B) Gamma rays, X-rays, Ultraviolet, Visible, Infrared, Microwave, RadioExplanation: The electromagnetic spectrum is arranged according to wavelength from shortest to longest, starting with gamma rays and ending with radio waves. 6. What is the approximate value of gravitational acceleration on Earth’s surface? A) 9.8 m/s²B) 10.8 m/s²C) 11.8 m/s²D) 8.8 m/s² Show Answer Correct Answer: A) 9.8 m/s²Explanation: The standard gravitational acceleration on Earth’s surface is approximately 9.8 meters per second squared. This value can vary slightly depending on altitude and geographical location. 7. Who discovered the electron? A) J.J. ThomsonB) Ernest RutherfordC) Niels BohrD) James Chadwick Show Answer Correct Answer: A) J.J. ThomsonExplanation: J.J. Thomson discovered the electron in 1897 through his experiments with cathode rays. His discovery marked the first identification of a subatomic particle. 8. What type of mirror is used to focus sunlight in solar cookers? A) Flat mirrorB) Convex mirrorC) Concave mirrorD) Plane mirror Show Answer Correct Answer: C) Concave mirrorExplanation: Concave mirrors are used in solar cookers to focus sunlight at a specific point to generate heat. This is because concave mirrors can converge light rays that hit their surfaces. 9. Which principle explains why airplanes are able to fly? A) Archimedes’ PrincipleB) Bernoulli’s PrincipleC) Pascal’s LawD) Newton’s Third Law Show Answer Correct Answer: B) Bernoulli’s PrincipleExplanation: Bernoulli’s Principle, which states that an increase in the velocity of a fluid occurs simultaneously with a decrease in pressure, is crucial in explaining the lift force generated by the wings of an airplane. 10. Which law explains the behavior of ideal gases under various conditions of temperature and pressure? A) Charles’s LawB) Boyle’s LawC) Dalton’s LawD) Ideal Gas Law Show Answer Correct Answer: D) Ideal Gas LawExplanation: The Ideal Gas Law, represented as PV=nRT, relates the pressure, volume, and temperature of an ideal gas with the amount of gas and the universal gas constant, providing a comprehensive description of gas behavior. 11. In a vacuum, which color of light travels the fastest? A) RedB) GreenC) BlueD) All colors travel at the same speed Show Answer Correct Answer: D) All colors travel at the same speedExplanation: In a vacuum, all colors of light travel at the same speed, which is the speed of light, approximately 299,792 kilometers per second. 12. What type of lens is used to correct nearsightedness? A) Convex lensB) Concave lensC) Cylindrical lensD) Bifocal lens Show Answer Correct Answer: B) Concave lensExplanation: Concave lenses are used to correct nearsightedness (myopia) by diverging light rays before they enter the eye, helping to focus the image on the retina. 13. Which scientist developed the quantum theory by introducing the quantum of action? A) Albert EinsteinB) Werner HeisenbergC) Max PlanckD) Erwin Schrödinger Show Answer Correct Answer: C) Max PlanckExplanation: Max Planck introduced the concept of the quantum of action, which laid the foundation for quantum theory. His work was pivotal in understanding the quantized nature of energy at microscopic scales. 14. What phenomenon causes the sky to appear blue? A) RefractionB) DispersionC) Rayleigh ScatteringD) Total Internal Reflection Show Answer Correct Answer: C) Rayleigh ScatteringExplanation: Rayleigh Scattering is responsible for the blue appearance of the sky. It occurs because molecules in the atmosphere scatter shorter (blue) wavelengths of light more than longer (red) wavelengths. 15. What is the principle that underlies the functioning of hydraulic lifts? A) Archimedes’ PrincipleB) Pascal’s LawC) Bernoulli’s PrincipleD) Newton’s Third Law Show Answer Correct Answer: B) Pascal’s LawExplanation: Pascal’s Law, which states that pressure applied to a confined fluid is transmitted undiminished through the fluid, is the principle that makes hydraulic lifts possible. 16. Which of the following describes the dual nature of light? A) Wave-particle dualityB) Uncertainty principleC) Superposition principleD) Exclusion principle Show Answer Correct Answer: A) Wave-particle dualityExplanation: Wave-particle duality is the concept that light and other forms of electromagnetic radiation exhibit both wave-like and particle-like properties. 17. What is the unit of electric charge? A) AmpereB) CoulombC) OhmD) Volt Show Answer Correct Answer: B) CoulombExplanation: The unit of electric charge is the coulomb. It measures the quantity of electricity conveyed by a current of one ampere flowing for one second. 18. Which gas law relates the volume and temperature of a gas at constant pressure? A) Charles’s LawB) Boyle’s LawC) Gay-Lussac’s LawD) Avogadro’s Law Show Answer Correct Answer: A) Charles’s LawExplanation: Charles’s Law states that the volume of an ideal gas at constant pressure is directly proportional to its absolute temperature. 19. What type of

MCQs on Economy [Set – 10]

MCQs Static GK, MCQs Economy

MCQs on Economy [Set – 10] 1. Which economist is most closely associated with the definition of economics as the science of wealth? A) Adam SmithB) Alfred MarshallC) John Maynard KeynesD) Karl Marx Show Answer Correct Answer: A) Adam SmithExplanation: Adam Smith, in his book The Wealth of Nations, defined economics as the science of wealth, making him closely associated with this definition. 2. How does Lionel Robbins define economics? A) Study of wealth and resourcesB) Study of scarcity and choiceC) Study of production and welfareD) Study of demand and supply Show Answer Correct Answer: B) Study of scarcity and choiceExplanation: Lionel Robbins defined economics as the study of scarcity and choice, emphasizing the allocation of limited resources to satisfy unlimited wants. 3. According to the scarcity definition, what are the primary economic problems? A) Production and consumptionB) Scarcity and choiceC) Demand and supplyD) Money and inflation Show Answer Correct Answer: B) Scarcity and choiceExplanation: The scarcity definition highlights that the primary economic problems arise from limited resources and the need to make choices. 4. What does the concept of opportunity cost refer to in economics? A) Cost of all alternative goodsB) Cost of all inputs in productionC) Cost of next best alternativeD) Cost of labor and capital Show Answer Correct Answer: C) Cost of next best alternativeExplanation: Opportunity cost refers to the value of the next best alternative that is foregone when making a decision. 5. How does economics address the issue of resource allocation? A) By studying government policiesB) By eliminating scarcity entirelyC) By minimizing production costsD) By analyzing opportunity costs Show Answer Correct Answer: D) By analyzing opportunity costsExplanation: Economics addresses resource allocation by analyzing opportunity costs, which helps in making efficient use of limited resources. 6. What is the basic economic problem that every economy faces? A) Unlimited wants and resourcesB) Unlimited wants and limited resourcesC) Limited wants and resourcesD) Limited wants and unlimited resources Show Answer Correct Answer: B) Unlimited wants and limited resourcesExplanation: Every economy faces the basic problem of having unlimited wants but only limited resources available to satisfy them. 7. In economics, what is meant by the term “marginal utility”? A) Satisfaction from all units consumedB) Decrease in total satisfaction over timeC) Total satisfaction from consumptionD) Additional satisfaction from one unit Show Answer Correct Answer: D) Additional satisfaction from one unitExplanation: Marginal utility refers to the additional satisfaction gained from consuming one more unit of a good or service. 8. How do economists define a rational decision-maker? A) One who maximizes utility or profitsB) One who minimizes costs and expensesC) One who avoids risks and uncertaintyD) One who increases wealth and savings Show Answer Correct Answer: A) One who maximizes utility or profitsExplanation: A rational decision-maker is someone who aims to maximize utility (for consumers) or profits (for firms) based on available information. 9. What is the role of trade-offs in economic decision-making? A) It helps balance production and consumptionB) It involves sacrificing one goal for anotherC) It increases efficiency in resource allocationD) It reduces costs in economic activities Show Answer Correct Answer: B) It involves sacrificing one goal for anotherExplanation: Trade-offs occur when choosing one option requires sacrificing another due to the scarcity of resources. 10. Which two primary factors do economists focus on when studying resource scarcity? A) Resources and wantsB) Wants and needsC) Supply and demandD) Production and labor Show Answer Correct Answer: A) Resources and wantsExplanation: Economists study the relationship between limited resources and unlimited wants to understand the problem of scarcity. 11. What does the term “allocation of resources” mean in economic theory? A) Distribution of income and wealthB) Measurement of national income levelsC) Determination of demand and supplyD) Assignment of limited resources to uses Show Answer Correct Answer: D) Assignment of limited resources to usesExplanation: Allocation of resources refers to assigning available resources to different uses in the most efficient way possible. 12. How does microeconomics differ from macroeconomics in terms of scope? A) Microeconomics studies national economies, macroeconomics focuses on firmsB) Microeconomics studies individual units, macroeconomics looks at entire economyC) Microeconomics looks at inflation, macroeconomics focuses on pricesD) Microeconomics studies governments, macroeconomics focuses on firms Show Answer Correct Answer: B) Microeconomics studies individual units, macroeconomics looks at entire economyExplanation: Microeconomics focuses on individual consumers, firms, and markets, while macroeconomics studies the economy as a whole. 13. What is meant by the term “economic efficiency”? A) Maximizing total production outputB) Minimizing government spendingC) Maximizing total utility or benefitD) Reducing overall economic costs Show Answer Correct Answer: C) Maximizing total utility or benefitExplanation: Economic efficiency occurs when resources are allocated in a way that maximizes total benefit or utility for society. 14. Classical economists define the scope of economics as A) The study of wealth accumulation and its distributionB) The study of individual choices and human behaviorC) The study of production techniques and capital formationD) The study of inflationary trends and unemployment rates Show Answer Correct Answer: A) The study of wealth accumulation and its distributionExplanation: Classical economists like Adam Smith viewed economics as the science of wealth, focusing on its accumulation and distribution. 15. Positive economics refers to A) The analysis of what is, based on observable factsB) The analysis of what should be, based on value judgmentsC) A focus on economic growth and future stabilityD) The study of government policies and regulation Show Answer Correct Answer: A) The analysis of what is, based on observable factsExplanation: Positive economics objectively analyzes economic realities without making normative (value-based) judgments. 16. Economic models simplify real-world problems to A) Reduce costsB) Create policiesC) Make predictionsD) Eliminate scarcity Show Answer Correct Answer: C) Make predictionsExplanation: Economic models are simplified frameworks used to analyze complex situations and predict outcomes. 17. Normative economics makes value judgments about A) What should beB) What isC) What is profitableD) What is scarce Show Answer Correct Answer: A) What should beExplanation: Normative economics involves opinions on how the economy ought to work, based on ethical or value-based beliefs. 18. The production possibility frontier (PPF) shows

MCQs on Economy [Set – 9]

MCQs Static GK, MCQs Economy

MCQs on Economy [Set – 9] 1. An increase in the repo rate will: A) Decrease the money supplyB) Increase the money supplyC) Stabilize the money supplyD) Not affect the money supply Show Answer Correct Answer: A) Decrease the money supplyExplanation: Increasing the repo rate makes borrowing more expensive for banks, thus reducing the money supply in the economy. 2. The practice of reducing government deficits and debt accumulation is known as: A) Fiscal expansionB) Fiscal consolidationC) Deficit financingD) Capital adequacy Show Answer Correct Answer: B) Fiscal consolidationExplanation: Fiscal consolidation involves policies aimed at reducing government deficits and debt through spending cuts or increased taxation. 3. Which market condition is characterized by a single seller and many buyers? A) MonopolyB) OligopolyC) Perfect competitionD) Monopolistic competition Show Answer Correct Answer: A) MonopolyExplanation: A monopoly exists when a single seller controls the entire market for a product or service, with no close substitutes. 4. Direct taxes in India are collected by: A) Central Board of Direct TaxesB) Central Board of Indirect Taxes and CustomsC) Reserve Bank of IndiaD) State Governments Show Answer Correct Answer: A) Central Board of Direct TaxesExplanation: The Central Board of Direct Taxes is responsible for the administration of direct taxes like income tax and wealth tax in India. 5. The economic cost of producing an additional unit of a product is called: A) Marginal costB) Total costC) Average costD) Opportunity cost Show Answer Correct Answer: A) Marginal costExplanation: Marginal cost is the cost of producing one more unit of a good, considering the cost of resources used in the production. 6. Which term describes the scenario when different companies sell identical products? A) Monopolistic competitionB) OligopolyC) MonopolyD) Perfect competition Show Answer Correct Answer: D) Perfect competitionExplanation: Perfect competition is a market structure where many firms offer a homogeneous product. 7. When the government of a country regularly spends more than it earns, it leads to: A) Trade surplusB) Balanced budgetC) Budget deficitD) Trade deficit Show Answer Correct Answer: C) Budget deficitExplanation: A budget deficit occurs when expenses exceed revenue, indicating that the government is spending more than it earns. 8. The primary objective of establishing Special Economic Zones (SEZs) is to: A) Protect domestic industriesB) Enhance environmental protectionC) Promote rapid economic growthD) Increase agricultural output Show Answer Correct Answer: C) Promote rapid economic growthExplanation: SEZs are established to promote rapid economic growth by leveraging tax incentives to attract investors and businesses. 9. Non-performing assets are significant because they: A) Generate substantial revenue for banksB) Indicate financial health of banksC) Reflect the economic growth of a countryD) Show efficient management of a bank Show Answer Correct Answer: B) Indicate financial health of banksExplanation: Non-performing assets are important as they indicate the level of risk and financial health of banks regarding defaulted loans that are not bringing in any interest income. 10. A sudden, significant decline in the stock market is known as a: A) Bull runB) Bear hugC) Market correctionD) Market crash Show Answer Correct Answer: D) Market crashExplanation: A market crash is a sudden, dramatic decline of stock prices across a significant cross-section of a stock market, resulting in a significant loss of paper wealth. 11. The process where the central bank of a country buys or sells government bonds in the market to regulate the money supply is called: A) Capital rationingB) Fiscal swappingC) Open market operationsD) Debt anchoring Show Answer Correct Answer: C) Open market operationsExplanation: Open market operations involve the buying and selling of government securities in the open market to regulate the liquidity and money supply in the economy. 12. In economics, ‘elasticity’ measures: A) The stiffness of the economyB) The sensitivity of one variable to changes in anotherC) The duration of long-term economic policiesD) The resistance to changes in fiscal policy Show Answer Correct Answer: B) The sensitivity of one variable to changes in anotherExplanation: Elasticity in economics measures how one economic variable responds to changes in another, such as the change in quantity demanded in response to a price change. 13. Which factor is not considered a determinant of demand? A) Consumer income levelsB) Production costsC) Prices of related goodsD) Consumer preferences Show Answer Correct Answer: B) Production costsExplanation: Production costs are a determinant of supply, not demand. Demand is influenced by factors such as consumer income, prices of related goods, and consumer preferences. 14. ‘Purchasing Power Parity’ is a theory that compares different countries’ currencies through: A) Political stabilityB) Stock market performanceC) A basket of goodsD) Gold reserves Show Answer Correct Answer: C) A basket of goodsExplanation: Purchasing Power Parity (PPP) is an economic theory that compares different countries’ currencies through a “basket of goods” approach to determine the relative value of the currencies. 15. Which concept is illustrated by the ‘Laffer Curve’? A) Relationship between tax rates and government revenueB) Impact of technological innovation on productivityC) Correlation between unemployment rates and workforce skill levelsD) Effect of education on economic growth Show Answer Correct Answer: A) Relationship between tax rates and government revenueExplanation: The Laffer Curve illustrates the relationship between tax rates and the amount of tax revenue collected by governments, showing that increasing tax rates beyond a certain point is counter-productive. 16. ‘Human capital’ refers to: A) Investment in machinery and technologyB) The value of a company’s employee baseC) Investments in education, training, and healthD) The total market value of all physical assets Show Answer Correct Answer: C) Investments in education, training, and healthExplanation: Human capital refers to the economic value of a worker’s experience and skills, including education, training, intelligence, skills, health, and other things employers value such as loyalty and punctuality. 17. The presence of ‘economies of scale’ is typically indicated by: A) Increasing per-unit costs with increased productionB) Decreasing per-unit costs with increased productionC) Stable per-unit costs regardless of production levelsD) Variable costs proportionate to sales Show Answer Correct Answer: B) Decreasing per-unit costs with increased productionExplanation: Economies of scale occur when a company’s production increases, leading to lower per-unit costs. 18. ‘Market failure’ is a situation where: A) The market does not allocate resources efficiently on its ownB) All producers in the

MCQs on Economy [Set – 8]

MCQs Static GK, MCQs Economy

MCQs on Economy [Set – 8] 1. The ‘Goods and Services Tax’ (GST) in India is a: A) Direct taxB) Indirect taxC) Corporate taxD) Wealth tax Show Answer Correct Answer: B) Indirect taxExplanation: GST is an indirect tax that has replaced many indirect taxes in India such as the excise duty, VAT, services tax, etc. It is aimed at being comprehensive for most goods and services. 2. Which body is primarily responsible for the regulation of the insurance industry in India? A) RBIB) SEBIC) IRDAID) AMFI Show Answer Correct Answer: C) IRDAIExplanation: The Insurance Regulatory and Development Authority of India (IRDAI) is the regulatory body responsible for regulating and promoting the insurance and re-insurance industries in India. 3. The ‘Pradhan Mantri Jan Dhan Yojana’ aims to increase banking penetration among which segment of the population? A) Urban upper classB) Non-resident IndiansC) Rural and urban poorD) Corporate entities Show Answer Correct Answer: C) Rural and urban poorExplanation: The Pradhan Mantri Jan Dhan Yojana (PMJDY) aims to increase banking services’ accessibility to the rural and urban poor, promoting financial inclusion. 4. The term ‘Statutory Liquidity Ratio’ (SLR) is used by the RBI to control which aspect of banking? A) Interest ratesB) InflationC) Bank creditD) Liquidity and credit Show Answer Correct Answer: D) Liquidity and creditExplanation: SLR (Statutory Liquidity Ratio) is a term used by banks to control the credit growth and liquidity by requiring banks to maintain a certain percentage of their net demand and time liabilities in liquid assets. 5. ‘Digital India’ campaign is primarily aimed at: A) Enhancing online infrastructure and internet connectivityB) Promoting digital transactions over cashC) Both A and BD) Developing the software export industry Show Answer Correct Answer: C) Both A and BExplanation: ‘Digital India’ is a campaign launched by the Government of India to ensure government services are made available to citizens electronically by improving online infrastructure and by increasing internet connectivity and making the country digitally empowered in the field of technology. 6. ‘Startup India’ initiative aims to: A) Facilitate bank loans for large industriesB) Provide tax relief to multinational companiesC) Promote sustainable development goalsD) Foster innovation through funding and incentives Show Answer Correct Answer: D) Foster innovation through funding and incentivesExplanation: ‘Startup India’ is a flagship initiative of the Government of India intended to build a strong ecosystem for nurturing innovation and startups in the country that will drive sustainable economic growth and generate large scale employment opportunities. 7. ‘National Financial Reporting Authority’ (NFRA) was established to: A) Monitor fiscal deficits of the statesB) Oversee compliance by financial institutions with various regulationsC) Regulate financial reporting by companiesD) Manage RBI’s financial reporting needs Show Answer Correct Answer: C) Regulate financial reporting by companiesExplanation: NFRA aims to improve the transparency and reliability of financial statements and information provided by companies, ensuring their compliance with accounting and financial reporting standards. 8. The ‘Insolvency and Bankruptcy Code’ (IBC) was enacted in India in: A) 2005B) 2016C) 2012D) 2018 Show Answer Correct Answer: B) 2016Explanation: The Insolvency and Bankruptcy Code, 2016, is a bankruptcy law in India seeking to consolidate the existing framework by creating a single law for insolvency and bankruptcy. 9. Which initiative was launched to upgrade the infrastructure of the MSME sector in India? A) Make in IndiaB) Digital IndiaC) Skill IndiaD) Zero Defect Zero Effect Show Answer Correct Answer: D) Zero Defect Zero EffectExplanation: ‘Zero Defect Zero Effect’ is an initiative launched for the MSME sector under which products that are manufactured for export have to adhere to certain quality standards while ensuring that the manufacturing process does not have a negative impact on the environment. 10. Which body is responsible for the regulation of commodity market transactions in India? A) SEBIB) RBIC) FMCD) NABARD Show Answer Correct Answer: A) SEBIExplanation: SEBI (Securities and Exchange Board of India) regulates commodity market transactions in India after the merger of the Forward Markets Commission (FMC) with SEBI in 2015. 11. The ‘Pradhan Mantri Kisan Samman Nidhi (PM-KISAN)’ provides income support to: A) All farmersB) Small and marginal farmersC) Landless agricultural laborersD) Women farmers Show Answer Correct Answer: B) Small and marginal farmersExplanation: The PM-KISAN scheme provides income support to all small and marginal farmers’ families across the country, aiming to meet their financial needs for procuring inputs related to agriculture and allied activities. 12. ‘RERA’ stands for: A) Real Estate Regulatory AuthorityB) Rural Economic Regulatory AgencyC) Renewable Energy Regulations ActD) Real Estate Reforms Act Show Answer Correct Answer: A) Real Estate Regulatory AuthorityExplanation: RERA, or Real Estate Regulatory Authority, was established to regulate and promote the real estate sector in India, ensuring the sale of plot, apartment, or building, or sale of a real estate project, in an efficient and transparent manner. 13. Which initiative was launched to improve the infrastructure for charging electric vehicles across India? A) AMRUTB) UDAYC) Smart City MissionD) FAME India Show Answer Correct Answer: D) FAME IndiaExplanation: FAME India (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) aims to support the development of electric and hybrid vehicle markets and their manufacturing ecosystem to achieve self-sustenance. 14. ‘Operation Greens’ aims to stabilize the supply of which commodities? A) Pulses and cerealsB) Oilseeds and vegetablesC) Tomato, Onion, and Potato (TOP)D) Fruits and nuts Show Answer Correct Answer: C) Tomato, Onion, and Potato (TOP)Explanation: Operation Greens aims to stabilize the supply chain for Tomato, Onion, and Potato (TOP), preventing fluctuations in the prices and ensuring farmer sustainability. 15. The ‘Atal Innovation Mission’ is a government initiative designed to promote: A) Cultural heritageB) Innovation and entrepreneurshipC) Traditional arts and craftsD) Rural tourism Show Answer Correct Answer: B) Innovation and entrepreneurshipExplanation: The Atal Innovation Mission (AIM) is aimed at fostering curiosity, creativity, and imagination in young minds and inculcating skills such as design thinking, problem-solving, adaptive learning, and physical computing among others. 16. ‘Electoral Bonds’ in India can be purchased from which institution? A) Reserve Bank of IndiaB) State Bank of IndiaC) Ministry of FinanceD) Securities and Exchange Board of India Show Answer Correct Answer: B) State Bank of IndiaExplanation: Electoral Bonds can be purchased by any citizen of India or

MCQs on Economy [Set – 7]

MCQs Static GK, MCQs Economy

MCQs on Economy [Set – 7] 1. What does the financial term ‘Amortization’ refer to? A) Process of incrementally charging off the cost of an assetB) Adjustment of lending rates by financial institutionsC) Calculation of depreciation in business assetsD) Evaluation of liquid assets in mergers and acquisitions Show Answer Correct Answer: A) Process of incrementally charging off the cost of an assetExplanation: Amortization is the practice of spreading an intangible asset’s cost over that asset’s useful life. 2. Which economic principle is illustrated by the ‘Phillips Curve’? A) Relationship between fiscal deficit and inflationB) Trade-off between unemployment and inflationC) Correlation between GDP growth and unemploymentD) Impact of taxation on consumer spending Show Answer Correct Answer: B) Trade-off between unemployment and inflationExplanation: The Phillips Curve illustrates the inverse relationship between rates of unemployment and corresponding rates of inflation. 3. A ‘Sovereign Bond’ is issued by: A) Multinational corporationsB) Private banksC) National governmentsD) Municipal governments Show Answer Correct Answer: C) National governmentsExplanation: Sovereign bonds are issued by national governments to borrow money. 4. An ‘Inverted Yield Curve’ typically indicates: A) Economic growthB) A potential recessionC) Immediate inflationD) Stable interest rates Show Answer Correct Answer: B) A potential recessionExplanation: 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. 5. What does GDP stand for? A) General Demand PercentageB) Global Deposit PoolingC) Government Debt PaymentD) Gross Domestic Product Show Answer Correct Answer: D) Gross Domestic ProductExplanation: 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. 6. Who is known as the father of economics? A) Adam SmithB) John Maynard KeynesC) Milton FriedmanD) David Ricardo Show Answer Correct Answer: A) Adam SmithExplanation: 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. 7. What does the term ‘liquidity’ refer to in economics? A) The profitability of a companyB) The solvency of a bankC) The ease of converting assets to cashD) The amount of capital a bank holds Show Answer Correct Answer: C) The ease of converting assets to cashExplanation: In economics, liquidity refers to how quickly and easily an asset can be converted into cash without affecting its market price. 8. Which organization produces the World Economic Outlook report? A) The World BankB) The International Monetary FundC) The United NationsD) The World Trade Organization Show Answer Correct Answer: B) The International Monetary FundExplanation: The International Monetary Fund publishes the World Economic Outlook, which assesses global economic trends and prospects. 9. What is stagflation? A) High inflation and high unemploymentB) High inflation and high growthC) Low inflation and low unemploymentD) Low inflation and high unemployment Show Answer Correct Answer: A) High inflation and high unemploymentExplanation: Stagflation is an economic condition marked by both high inflation and high unemployment, presenting a challenge for economic policy. 10. What does a ‘bull market’ signify? A) Falling stock pricesB) Rising stock pricesC) Stagnant stock pricesD) Volatile stock prices Show Answer Correct Answer: B) Rising stock pricesExplanation: A bull market refers to a financial market of a group of securities in which prices are rising or are expected to rise. 11. What is fiscal policy? A) Policy on currency managementB) Foreign trade managementC) Banking regulationsD) Government spending and taxation Show Answer Correct Answer: D) Government spending and taxationExplanation: Fiscal policy involves government spending and taxation to influence the economy. 12. What is the main function of the World Trade Organization (WTO)? A) To provide loans to developing countriesB) To regulate global financial marketsC) To oversee global trade agreementsD) To manage global gold reserves Show Answer Correct Answer: C) To oversee global trade agreementsExplanation: The WTO is responsible for overseeing global trade agreements and ensuring that trade flows as smoothly and freely as possible. 13. Which term describes the total stock of money circulating in an economy? A) Fiscal flowB) Capital stockC) Money supplyD) Credit line Show Answer Correct Answer: C) Money supplyExplanation: Money supply refers to the total volume of money circulating within an economy at any given time. 14. Which indicator is used to measure economic activity based on production? A) GDPB) CPIC) GNPD) PPI Show Answer Correct Answer: A) GDPExplanation: GDP, or Gross Domestic Product, measures economic activity based on the total value of all goods and services produced over a specific time period. 15. What does ‘quantitative easing’ aim to stimulate? A) Stock market investmentsB) Economic growthC) Export ratesD) Interest rates Show Answer Correct Answer: B) Economic growthExplanation: Quantitative easing is a monetary policy used by central banks to stimulate the economy by increasing the money supply. 16. What is a ‘trade surplus’? A) When a country’s imports exceed its exportsB) When a country’s exports exceed its importsC) When trade exactly balancesD) When a country does not engage in trade Show Answer Correct Answer: B) When a country’s exports exceed its importsExplanation: A trade surplus occurs when a country exports more than it imports, indicating a net inflow of domestic currency from foreign markets. 17. What does the ‘law of demand’ state? A) Price increase leads to demand decreaseB) Price increase leads to demand increaseC) Demand is independent of priceD) Demand decreases as supply decreases Show Answer Correct Answer: A) Price increase leads to demand decreaseExplanation: The law of demand states that, all else being equal, as the price of a product increases, quantity demanded decreases, and vice versa. 18. What role do ‘commercial banks’ play in the economy? A) They only issue government bondsB) They primarily deal with stock investmentsC) They facilitate the flow of capitalD) They regulate monetary policies Show Answer Correct Answer: C) They facilitate the flow of capitalExplanation: Commercial banks play a critical role in the economy by accepting deposits, granting loans, and facilitating the flow of capital from savers to borrowers. 19. Who is responsible for determining the bank rate in India? A) The Finance MinisterB) The Governor of RBIC) SEBID) The Indian President Show Answer Correct Answer: B) The Governor of RBIExplanation: The bank

MCQs on Economy [Set – 6]

MCQs Static GK, MCQs Economy

MCQs on Economy [Set – 6] 1. What does the ‘Primary Market’ in finance entail? A) Trading of old stocksB) Issuance of new stock sharesC) Selling of government securitiesD) Buying of defaulted loans Show Answer Correct Answer: B) Issuance of new stock sharesExplanation: The primary market is the part of the capital market that deals with the issuance and sale of equity-backed securities to investors directly by the issuer. It is also known as the new issues market. 2. ‘Nominal GDP’ differs from ‘Real GDP’ because it is calculated in: A) Current pricesB) Constant pricesC) Fixed pricesD) Estimated prices Show Answer Correct Answer: A) Current pricesExplanation: Nominal GDP is an assessment of economic production in an economy that includes current prices in its calculation, in contrast to real GDP that is adjusted for inflation. 3. Which of the following is a characteristic feature of a ‘Public Limited Company’? A) Its shares are traded on the stock marketB) It cannot issue debenturesC) It is managed by a single directorD) It does not allow public to buy its shares Show Answer Correct Answer: A) Its shares are traded on the stock marketExplanation: A public limited company is a company whose securities are traded on a stock exchange and can be bought and sold by anyone. 4. An increase in the General Sales Tax would generally result in: A) A decrease in inflationB) An increase in consumptionC) An increase in the production cost of goodsD) A decrease in the export of goods Show Answer Correct Answer: C) An increase in the production cost of goodsExplanation: An increase in the General Sales Tax will lead to higher production costs for manufacturers and retailers, which can then lead to higher prices for consumers. 5. Which rate is referred to when the RBI lends to commercial banks overnight? A) Repo RateB) Reverse Repo RateC) Bank RateD) Marginal Standing Facility Rate Show Answer Correct Answer: D) Marginal Standing Facility RateExplanation: The Marginal Standing Facility (MSF) rate is the rate at which banks can borrow overnight funds from the Reserve Bank of India against approved government securities. 6. The Securities and Exchange Board of India (SEBI) was established in: A) 1988B) 1991C) 1992D) 1995 Show Answer Correct Answer: A) 1988Explanation: SEBI was established in 1988 to regulate the securities market and protect the interests of investors in securities. 7. Which term describes the total value of all goods and services produced within a country adjusted for price changes or inflation? A) Nominal GDPB) Real GDPC) Gross National Product (GNP)D) Net National Product (NNP) Show Answer Correct Answer: B) Real GDPExplanation: Real GDP is an inflation-adjusted measure that reflects the value of all goods and services produced by an economy in a given year. 8. The Non-Banking Financial Companies (NBFCs) in India are regulated by: A) RBIB) SEBIC) IRDAID) PFRDA Show Answer Correct Answer: A) RBIExplanation: Non-Banking Financial Companies (NBFCs) are regulated by the Reserve Bank of India, ensuring they provide financial services according to the norms. 9. Who issues Treasury Bills in India? A) Commercial BanksB) Reserve Bank of IndiaC) Securities and Exchange Board of IndiaD) Ministry of Finance Show Answer Correct Answer: B) Reserve Bank of IndiaExplanation: The Reserve Bank of India issues Treasury Bills on behalf of the Government of India to manage short-term liquidity. 10. The Consumer Protection Act was enacted in India in which year? A) 1986B) 1992C) 2001D) 2010 Show Answer Correct Answer: A) 1986Explanation: The Consumer Protection Act, which provides a way of redressal for the grievances of consumers, was enacted in India in 1986. 11. Which factor is likely to cause a currency to appreciate? A) Higher inflationB) Higher interest ratesC) Political instabilityD) A trade deficit Show Answer Correct Answer: B) Higher interest ratesExplanation: Higher interest rates provide higher returns on investments denominated in that currency, hence increasing its value compared to other currencies. 12. In India, ‘G-Sec’ refers to: A) General SecuritiesB) Government SecuritiesC) Graded SecuritiesD) Guaranteed Securities Show Answer Correct Answer: B) Government SecuritiesExplanation: In India, G-Secs, short for Government Securities, are debt instruments issued by the government to borrow money. 13. What does ‘LTV’ stand for in mortgage banking? A) Long-Term ValuationB) Legal Tender ValueC) Lease to ValueD) Loan to Value Show Answer Correct Answer: D) Loan to ValueExplanation: In mortgage banking, LTV or Loan to Value ratio is an assessment used by lenders to determine the risk of issuing a mortgage to a borrower, measured by dividing the amount of the mortgage by the value of the property. 14. An economic policy of tight government control over trade and foreign businesses operating within a country is known as: A) LiberalismB) ProtectionismC) CapitalismD) Globalism Show Answer Correct Answer: B) ProtectionismExplanation: Protectionism refers to government actions and policies that restrict international trade to help domestic industries from foreign competition. 15. Which one of these is a long-term financial instrument? A) Treasury BillB) Commercial PaperC) Corporate BondD) Certificate of Deposit Show Answer Correct Answer: C) Corporate BondExplanation: Corporate bonds are long-term financial securities issued by companies to raise funds directly from the capital market. 16. A situation where the supply of a good or service is insufficient for the demand in the market leads to: A) ShortageB) SurplusC) EquilibriumD) Stagnation Show Answer Correct Answer: A) ShortageExplanation: A market shortage occurs when demand exceeds supply – that is, when the price is too low to equate the quantity supplied with the quantity demanded. This situation typically causes a rise in price. 17. Fiscal deficit occurs when: A) Total expenditure equals total revenueB) Total expenditure exceeds total revenueC) Total revenue exceeds total expenditureD) Government debts are fully repaid Show Answer Correct Answer: B) Total expenditure exceeds total revenueExplanation: Fiscal deficit is an economic phenomenon that occurs when the government’s total expenditure surpasses its total revenue (excluding money from borrowings). 18. Which index measures changes in the price level of market basket consumer goods and services purchased by households? A) Consumer Price Index (CPI)B) Wholesale Price Index (WPI)C) Producer Price Index (PPI)D) Retail Price Index (RPI) Show Answer Correct Answer: A) Consumer Price Index (CPI)Explanation: The Consumer Price Index (CPI)

MCQs on Economy [Set – 5]

MCQs Static GK, MCQs Economy

MCQs on Economy [Set – 5] 1. Which financial tool is used primarily to hedge against the risk of adverse price movements in an asset? A) Stock optionsB) BondsC) DerivativesD) Mutual funds Show Answer Correct Answer: C) DerivativesExplanation: Derivatives are financial instruments whose value is derived from a particular asset, index, or interest rate. They are primarily used to hedge against risks and can also be used for speculative purposes. 2. What are ‘Non-performing Assets’ (NPA)? A) Assets that bring in the highest level of income to banksB) Investments in non-financial instrumentC) Bank assets that are not generating incomeID) Government-owned assets Show Answer Correct Answer: C) Bank assets that are not generating incomeExplanation: Non-performing Assets are loans or advances where the interest and/or installment of principal remain overdue for a period of more than 90 days. 3. ‘Demat Account’ is necessary for which of the following? A) Saving moneyB) Trading in stocksC) Keeping physical goldD) Real estate transactions Show Answer Correct Answer: B) Trading in stocksExplanation: A Demat account, or dematerialized account, provides the facility of holding shares and securities in electronic format. During online trading, shares are bought and held in a Demat account, thus facilitating easy trade for the users. 4. Which of the following is considered a macroeconomic factor? A) Company earningsB) Stock market trendsC) CEO decisionsD) Unemployment rate Show Answer Correct Answer: D) Unemployment rateExplanation: The national unemployment rate is a macroeconomic factor as it reflects the economic conditions of a country and impacts economic policy decisions. 5. ‘Open Market Operations’ refer to the buying and selling of: A) Goods in international marketsB) Government securities by the central bankC) Shares by large corporationsD) Currencies by foreign exchange dealers Show Answer Correct Answer: B) Government securities by the central bankExplanation: Open Market Operations involve the buying and selling of government securities in the open market by a central bank to control the money supply and interest rates. 6. Which organization is responsible for maintaining foreign exchange reserves in India? A) Reserve Bank of IndiaB) Finance Ministry of IndiaC) State Bank of IndiaD) Securities and Exchange Board of India Show Answer Correct Answer: A) Reserve Bank of IndiaExplanation: The Reserve Bank of India is responsible for managing India’s currency and maintaining foreign exchange reserves to manage the country’s balance of payments and influence the national currency’s exchange rate. 7. Which of the following is NOT a function of the stock market? A) Mobilizing savings for investmentB) Facilitating company growthC) Regulating direct tax for the governmentD) Providing liquidity to shareholders Show Answer Correct Answer: C) Regulating direct tax for the governmentExplanation: Regulating direct taxes is not a function of the stock market. Stock markets are primarily involved in mobilizing savings for investment, facilitating company growth, and providing liquidity. 8. The practice of selling goods or services below cost to drive competitors out of the market is known as: A) Cost leadershipB) MonopolizingC) Value pricingD) Predatory pricing Show Answer Correct Answer: D) Predatory pricingExplanation: Predatory pricing is the illegal act of setting prices low in an attempt to eliminate the competition. It is considered an unfair competition practice by many legal jurisdictions. 9. ‘Deflation’ is a decrease in the: A) Volume of trade in goods and servicesB) General price level of goods and servicesC) Level of unemployment in an economyD) Rate of interest on loans Show Answer Correct Answer: B) General price level of goods and servicesExplanation: Deflation is the general decline in prices for goods and services occurring when the inflation rate falls below 0%. 10. The ‘Base Rate’ is set by: A) Individual commercial banksB) Reserve Bank of IndiaC) Ministry of FinanceD) Securities Exchange Board of India Show Answer Correct Answer: A) Individual commercial banksExplanation: The Base Rate is the minimum rate set by individual banks below which they are not allowed to lend to their most credit-worthy customers. It is decided by the banks themselves based on the cost they incur on lending. 11. Which among the following best describes ‘Net Asset Value’ (NAV)? A) It is the total value of a company’s assets onlyB) It is the value per share of a mutual fund or an ETFC) It represents the intrinsic worth of a companyD) It is the total liabilities of a company Show Answer Correct Answer: B) It is the value per share of a mutual fund or an ETFExplanation: Net Asset Value (NAV) is the price at which shares of closed-end funds are traded in the market. It is calculated by dividing the total value of all the assets in the portfolio, minus liabilities, by the number of shares outstanding. 12. The ‘Plaza Accord’ is related to which of the following? A) Regulating international tradeB) Reducing agricultural subsidiesC) Currency devaluationD) Education reforms Show Answer Correct Answer: C) Currency devaluationExplanation: The Plaza Accord was an agreement among the G5 nations (France, Germany, the US, the UK, and Japan) in 1985 to manipulate exchange rates by depreciating the US Dollar relative to the Japanese Yen and German Deutsche Mark. 13. Which scenario would most likely lead to an appreciation of a country’s currency? A) Trade deficitB) Political instabilityC) High inflationD) High interest rates Show Answer Correct Answer: D) High interest ratesExplanation: High interest rates attract foreign capital and cause the exchange rate to rise. The impact of higher interest rates is mitigated if inflation in the country is much higher than in others, or if additional factors serve to drive the currency down. 14. Which of the following is not typically considered a tool of monetary policy? A) Open market operationsB) Public spendingC) Bank rate policyD) Reserve requirements Show Answer Correct Answer: B) Public spendingExplanation: Public spending is typically a tool of fiscal policy, not monetary policy. Monetary policy tools include open market operations, bank rate adjustments, and reserve requirements. 15. ‘Microfinance’ is aimed primarily at: A) Large corporationsB) Established medium-sized enterprisesC) Small and individual business venturesD) Government projects Show Answer Correct Answer: C) Small and individual business venturesExplanation: Microfinance provides small-scale financial services to unemployed or low-income individuals or groups who would otherwise have no other means of gaining

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