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- Question
Which of the following will be the outcome if an economy is under the inflationary pressure? 1.Domestic currency heads for depreciation. 2.Exports become less competitive with imports getting costlier. 3.Cost of borrowing decreases.4.Bondholders get benefitted. Select the correct answer using the code given below.
Options- A. 1 and 2
- B. 2 and 3
- C. 1 and 3 only
- D. 1, 3 and 4
- Correct Answer
- 1 and 3 only
ExplanationCreditors and debtors:
During inflation creditors lose because they receive in effect less in goods and services than if they had received the repayments during a period of low prices. Debtors, on other hand, as a group gain during inflation, since they repay their debts in currency that has lost its value.The aggregate volume of internal trade tends to increase during inflation due to higher incomes, greater production and larger spending. But the export trade is likely to suffer on account of arise in the prices of domestic goods.
The same currency unit will now buy less goods and services.But the bondholders lose as they get a fixed interest the real value of which has already fallen.
- 1. Which one of the following with regard to the term ?bank run? is correct?
Options- A. The net balance of money a bank has in its chest at the end of the day?s business
- B. The ratio of bank?s total deposits and total liabilities
- C. A panic situation when the deposit holders start withdrawing cash from the banks
- D. The period in which a bank creates highest credit in the market Discuss
- 2. India's population growth is characterized by
Options- A. An increase in rate of death
- B. An increase in the ratio of females
- C. An increase in the birth rate and declining death rate
- D. Increasing number of old people Discuss
- 3. Movement along the supply curve is known as ______
Options- A. Contraction of supply
- B. Expansion of supply
- C. Increase in supply
- D. Expansion and contraction of supply Discuss
- 4. Lowering of value of currency relative to a foreign reference currency is called _________.
Options- A. Devaluation
- B. Revaluation
- C. Down valuation
- D. Negative valuation Discuss
- 5. A company faces a -2.5 price elasticity of demand for its product. It is presently selling 10,000 units/month. If it wants to increase quantity sold by 6%, it must lower its price by
Options- A. 3.50%
- B. 15%
- C. 2.50%
- D. 2.40% Discuss
- 6. Capital deepening refers to
Options- A. going for more fixed capital per worker
- B. emphasis on social overhead capital
- C. constant capital-output ratio
- D. increasing capital-output ratio Discuss
- 7. Which one of the following is not an assumption in the law of demand?
Options- A. There are no changes in the taste and preferences of consumers
- B. Income of consumers remains constant
- C. Consumers are affected by demonstration effect
- D. There are no changes in the price of substitute goods. Discuss
- 8. Which one of the following statements is not correct?
Options- A. When total utility is maximum, marginal utility is zero
- B. When total utility is decreasing, marginal utility is negative
- C. When total utility is increasing, marginal utility is positive
- D. When total utility is maximum,marginal and average utility are equal to each other. Discuss
- 9. Consider the following statements about indifference curves: 1. Indifference curves are convex to the origin. 2. Higher indifference curve represents higher level of satisfaction. 3. Two indifference curves cut each other.Which of the statements given above is/are correct?
Options- A. 1 only
- B. 1 and 2
- C. 2 and 3
- D. 3 only Discuss
- 10. Consider the following statements about a joint-stock company: 1. It has a legal existence. 2. There is limited liability of shareholders. 3. It has a democratic management. 4. It has a collective ownership. Which of the statements given above are correct?
Options- A. 1 and 2 only
- B. 1, 2 and 3 only
- C. 3 and 4 only
- D. 1, 2, 3 and 4 Discuss
Indian Economy problems
Search Results
Correct Answer: A panic situation when the deposit holders start withdrawing cash from the banks
Explanation:
A bank run occurs when a large number of people withdraw their money from a bank, because they believe the bank may cease to function soon.
A banking panic or bank panic is a financial crisis that occurs when many banks suffer runs at the same time, as people suddenly try to convert their threatened deposits into cash or try to get out of their domestic banking system altogether.
Correct Answer: An increase in the birth rate and declining death rate
Correct Answer: Expansion and contraction of supply
Correct Answer: Devaluation
Correct Answer: 2.40%
Correct Answer: going for more fixed capital per worker
Explanation:
Capital deepening is a situation where the capital per worker is increasing in the economy. This is also referred to as increase in the capital intensity. Capital deepening is often measured by the rate of change in capital stock per labour hour.
Correct Answer: Consumers are affected by demonstration effect
Explanation:
There are certain assumptions underlying the law of demand, which are as follows:
i. Assumes that the consumer?s income remains same
ii. Assumes that the preferences of consumer remain same.
iii. Considers that the fashion does not show any changes, because if fashion changes, then people would not purchase the products that are out of fashion.
iv. Assumes that there would be no change in the age structure, size, and sex ratio of population. This is because if population size increases, then the number of buyers increases, which, in turn, affect the demand for a product directly.
v. Restricts the innovation and new varieties of products in the market, which can affect the demand for the existing product.
vi. Restricts changes in the distribution of income.
vii. Avoids any type of change fiscal policies of the government of a nation, which reduces the effect of taxation on the demand of product.
Correct Answer: When total utility is maximum,marginal and average utility are equal to each other.
Explanation:
Total utility -It is total psychological satisfaction which a consumer derives from the consumption of a commodity is known as total utility
Marginal utility -It is anaddition made in total utility by consuming and additional unit of a commodity is known as marginal utility.
?When marginal utility is positive,total utility increases
?When marginal utility is zero,total utility is at maximum
?When marginal utility is negative,total utility decreases
Correct Answer: 1 and 2
Explanation:
The indifference curves cannot intersect each other.
Higher indifference curve represents a higher level of satisfaction because higher IC means a bundle consisting more of both the goods or same quantity of one good n more quantity of the other good .Hence statement 2 is correct and 3 is incorrect.
Indifference curves is convex to the point of origin because of diminishing Marginal Rate of Substitution.
Correct Answer: 1, 2, 3 and 4
Explanation:
Joint stock company is a voluntary association of individuals for profit, having a capital divided into transferable shares, the ownership of which is the condition of membership.
The definition of a joint stock company highlights the following features of a company.
Separate legal entity:From the day of its incorporation, a company acquires an identity, distinct from its members. Its assets and liabilities are separate from those of its owners. The law does not recognise the business and owners to be one and the same.
The management and control of the affairs of the company is undertaken by the Board of Directors, which appoints the top management officials for running the business. The directors hold a position of immense significance as they are directly accountable to the shareholders for the working of the company. The shareholders, however, do not have the right to be involved in the day-to-day running of the business. The liability of the members is limited to the extent of the capital contributed by them in a company
The risk of losses in a company is borne by all the shareholders. This is unlike the case of sole proprietorship or partnership firm where one or few persons respectively bear the losses.
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