MCQs on Economics -16

1. Select the correct statement regarding ‘environmental audit’:
(a) It is done to guage the damage a firm is doing to the environment.
(b) It is done with the objective to reduce or eliminate the pollution aspect of firms.
(c) It is done to calculate the ‘Green GDP’ of an economy.
(d) None of the above.


2. Select the incorrect statements regarding ‘equity linked schemes (ELSS)’
i. They are offered by mutual fund companies, but unlike the mutual funds, they do not have a lock-in period.
ii. They fall under ‘low risk’ and ‘high return’ category.
(a) Only I
(b) Only ii
(c) Both I and ii
(d) Neither i and ii


3. Select the correct statement about the ‘Fisher Effect’
(a) Higher the income one earns, lower part of it spends on the fulfillment of food.
(b) Consumers non-durables are the major drivers of high economic growth in the developed economies driven by the rise of consumerism.
(c) The nominal rate of interest on a loan is sum of the real interest rate and the rate of inflation expected over the duration of the loan.
(d) International trade’s volume is directly proportional to the expansion of the multinational companies away from their home countries.


4. Select the correct difference between the NEER and REER:
(a) While in NEER the current rate of inflation is adjusted, it is not adjusted in REER
(b) While the rate of inflation is adjusted in REER, it is left unadjusted in the REER
(c) While the REER is calculated by the IMF for a currency, the REER is calculated by the economy whose currency it is.
(d) While the REER shows the nominal value of the exchange rate of currency, the NEER shows it in comparative contest.


5. Consider the following statements and select the incorrect statement:
i. Dual Rate of exchange is seen in a kind of fixed exchange rate system.
ii. In Dual Rate of exchange there are two rates of exchange for a currency –one driven by the IMF and the other derived by the economy who owns the currency.
(a) Only I
(b) Only ii
(c) i and ii both
(d) Neither I nor ii


6. Select the incorrect statement(s) about the concept ‘Gini Coefficient’:
i. It is an inequality indicator in an economy, which was developed taking the clue from the ‘Phillips curve’.
ii. The coefficient varies from zero to one–where shows absolute inequality one indicates the situation of perfect equality.
iii. It has been highly useful tool in achieving perfect equality in Finland, Norway and Sweden.
(a) i and ii
(b) ii and iii
(c) iii and I
(d) i, ii and iii


7. Which of the following statements are correct with regard to RuPay debit card?
1. It is issued by National Payment Corporation.
2. It can be used both within and outside the country.
3. It can be used for unlimited transactions.
4. It can be used only in India for limited value of transactions.

Select the correct answer using the codes given below
(a) 1 and 2 only
(b) 1, 2 and 3 only
(c) 1 and 4 only
(d) 1, 3 and 4 only


8. Which of the monetary policy tool(s) is/are NOT with government securities?
1. Cash Reserve Ratio
2. Repo Rate
3. Statutory Liquidity Ratio
4. Marginal Standing Facility

Select the correct answer using the codes given below:
(a) 1 and 2 only
(b) 1 only
(c) 1 and 4 only
(d) 4 only


9. Select the situation /situations related to a period of ‘inequality trap’:
i. Interest rate going so low that people prefer to hold money rather than invest it.
ii. Cutting interest rate further low rejuvenates investment.
(a) Only i
(b) Only ii
(c) Both i and ii
(d) Neither i and ii


10. Select the incorrect statement from the given list:
(a) Banking year of India runs from January to December.
(b) Financial year of the IMF runs from July to June.
(c) Agricultural year of India runs from June to May.
(d) Financial year of the USA and Pakistan one most similar to that of the IMF.


11. Select the correct statement /statements from the given list:
i. A situation when people think that they are getting richer during the times of inflation is known as ‘money illusion’.
ii. It is believed that lower levels of ‘money illusion’ are beneficial to ‘grease the wheels of the economy’.
(a) Only i
(b) Only ii
(c) Both i and ii
(d) Neither i or ii


12. Select the correct statement about the Mumbai Inter Bank Bid (MIBID):
(a) The weighted average interest rate at which certain banks in Mumbai are ready to borrow the long term lenders.
(b) The weighted average interest rate at which certain banks in Mumbai are ready to lend for long term purpose.
(c) The weighted average interest rate at which certain banks in Mumbai are ready to borrow from the call money market.
(d) The freighted average interest rate at which certain banks in Mumbai are ready to lend in the call money market.


13. Select the in correct statement regarding a ‘Mutual Fund’ from the given list:
i. The ‘promoter’ of this fund is known as the ‘sponsor’
ii. ‘Trustees’ of the fund are appointed by the ‘sponsor’
iii. ‘Sponsor’ and the ‘trustees’ as a team are responsible to the investors.
(a) Only i
(b) Only ii
(c) i and iii
(d) None of the above


14. The goods whose demand increases as income of the people increase are
(a) Inferior goods
(b) Giffen goods
(c) Normal goods
(d) None of the above


15. Consider the statements given below and select the incorrect code:
i. Liquidity trap is a situation when people prefer to hold money rather invest it
ii. Liquidity preference is the situation when people prefer to invest money rather hold it
(a) Only I
(b) Only ii
(c) Both i and ii
(d) Neither i and ii

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