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Economics Questions and Answers for Competitive Exams | Indian Economy Quiz Set 21

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(1) Which among the following is/are true for Real Effective Exchange Rate of the currency of a country ?
(1) It is weighted average of the value of traded currencies.
(2) It is adjusted for inflation rate of prices.
(3) It is not adjusted for inflation of prices.
(4) Both (1) and (2) are true.
Answer: Both (1) and (2) are true.
(2) During the episode of sustained fall in crude oil prices during the year 2015, which among the following best describes the pricing strategy of the OPEC countries ?
(1) Transfer pricing
(2) Predatory pricing
(3) Defensive pricing
(4) Profit maximising prices
Answer: Defensive pricing

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(3) If the offer curves of the trading countries have constant slope, the terms of trade among them will be
(1) constant
(2) decreasing
(3) increasing
(4) indeterminate
Answer: indeterminate
(4) In the context of the Indian economy, which of the following options correctly describe the composition of the foreign exchange resources ?
(1) Foreign currency + loans from the World Bank + SDRs + Gold holdings of R.B.I.
(2) Foreign Currency Assets + Gold holdings of R.B.I. + F.D.I.
(3) SDRs + Gold holdings of the R.B.I. + Foreign Currency Assets.
(4) Remittances of NRIs + Exports earnings in a year + loans from the IMF.
Answer: SDRs + Gold holdings of the R.B.I. + Foreign Currency Assets.
(5) Which among the following are true for excess demand function for an individual ?
(1) Homogenous of degree zero in all prices.
(2) These obey Walra’s law.
(3) Both (1) and (2) are true.
(4) Neither (1) nor (2) are true.
Answer: Both (1) and (2) are true.
(6) A firm will be of optimum size when
(1) Marginal cost is at a minimum.
(2) Average cost is at a minimum.
(3) Marginal cost is equal to marginal revenue.
(4) The firm maximises its output.
Answer: Average cost is at a minimum.
(7) The time preference theory of interest was developed by
(1) Wicksell
(2) Böhm-Bawerk
(3) Irving Fisher
(4) J.M. Keynes
Answer: Irving Fisher
(8) Which of the following statements is/are true for Arrow-Debreu model of general equilibrium ?
(1) Goods are identified where they are to be delivered.
(2) Goods are identified when they are to be delivered.
(3) Both (1) and (2)
(4) None of these
Answer: Both (1) and (2)
(9) If Sales tax on a commodity is raised, but the revenue earned through its sale decreases sharply, which one of the following statements about the nature of this commodity would be correct ?
(1) Price elasticity of demand for it is unity.
(2) It must be an essential goods.
(3) Price elasticity of demand for it is high.
(4) Price elasticity of demand for it is low.
Answer: Price elasticity of demand for it is high.
(10) One of the essential conditions of monopolistic competition is
(1) Homogeneous product
(2) Product differentiation
(3) Price discrimination
(4) Many buyers but one seller
Answer: Product differentiation
(11) Logical extension of Cournot model is
(1) Bertrand model
(2) Stackelberg model
(3) Sweezy model
(4) None of the above
Answer: Stackelberg model
(12) Minimum support prices for Agricultural Commodities are fixed after taking into account the recommendations of which of the following bodies ?
(1) Ministry of Agriculture
(2) Ministry of Food Processing
(3) NITI AAYOG
(4) Commission for Agricultural Costs & Prices (CACP)
Answer: Commission for Agricultural Costs & Prices (CACP)
(13) Diversification of agriculture implies
(1) Increase in the cropping intensity.
(2) Shifting labour from agriculture to other areas.
(3) Promoting cottage and village industries.
(4) Changing the cropping pattern in favour of horticulture and floriculture crops.
Answer: Changing the cropping pattern in favour of horticulture and floriculture crops.
(14) Which one of the following schemes is not included in the Rashtriya Krishi Vikas Yojna (RKVY) ?
(1) National Mission for Protein Supplements
(2) Saffron Mission
(3) Accelerated Fodder Development Programme.
(4) All of the above
Answer: All of the above
(15) The Agricultural Census is done at which one of the following intervals ?
(1) Every year
(2) Once in 3 years
(3) Once in 5 years
(4) Once in 10 years
Answer: Once in 5 years

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