गाेवा लाेकसेवा आयाेग परीक्षा पूर्वतयारी - ३३

1  Question Description Suppose an economy is in long-run equilibrium at the full-employment level of output. If government spending then increases -------

A an inflationary gap is created because the aggregate demand curve shifts to the right

B an inflationary gap is created because the aggregate supply curve shifts to the right

C an inflationary gap is created because potential GDP shifts to the left

D a recessionary gap is created because the aggregate supply curve shifts to the left

E None of the above

Correct Answer A

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2 Question Description Consider the following statements in regard to Zero Base Budgeting (ZBB) :

1.)Existing Government programs can be discarded under ZBB if they are found to be outdated.

2.)ZBB is difficult to be applied to Human Development programmes as the outcome of such programme is intangible in nature.

Which of the statements given above is/are correct?

A 1 only

B 2 only

C Both 1 and 2

D Neither1 nor 2

E None of the above

Correct Answer C

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3 Question Description Look at the following statements about real exchange rate

1.It is taken as a measure of a country’s international competitiveness

2.It refers to the relative price of goods

3.It has bearing on export and imports of the country

Which of the statements given above are correct?

A Only 1 and 2

B Only 2 and 3

C Only 1 and 3

D All of the above

E None of the above

Correct Answer D

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4 Question Description With reference to ‗Consumer Confidence Survey‘, consider the following statements:

1.It is released by the Central Statistics Office (CSO)

2.This Survey is being used by the Reserve Bank as one of the important inputs for monetary Policy formulation.

Which of the statements given above is/are correct?

A 1 only

B 2 only

C Both 1 and 2

D Neither 1 nor 2

E None of the above

Correct Answer B

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5 Question Description Which is the main point on the basis of which public finance can be separated from private finance:

A Price policy

B Borrowings

C Secrecy

D Elasticity in income

E None of the above

Correct Answer C

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6 Question Description Which of the following statements is false?

A There will be no consumer surplus under first degree price discrimination.

B Dead weight loss is high under first degree price discrimination.

C Third degree price discrimination involves separating consumers or markets in terms of their price elasticity of demand.

D Under third degree price discrimination a firm charges a lower price in a market with more elastic demand than in the market with less elastic demand.

E None of the above

Correct Answer B

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7 Question Description What would be the sequence of events when RBI increases money supply by reducing CRR?

i)Interest rates fall.

ii)Increase in investment expenditure.

iii)Portfolio disequilibrium.

iv)Increase in price of financial assets.

A (i), (ii), (iii), (iv).

B (iii), (iv), (i), (ii).

C (ii), (iii), (iv), (i).

D (iv), (iii), (ii), (i).

E None of the above

Correct Answer B

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8 Question Description I f the government increases its expenditure and simultaneously adjusts the tax rate such that the budget deficit remains at the original level, then which of the following is true?

A The equilibrium income remains unchanged.

B The equilibrium income increases by the amount of increase in government expenditure.

C The equilibrium income will increase by the amount of increase in government expenditure if marginal propensity to consume is

greater than the investment- income ratio in the investment function.

D The equilibrium income will increase by the amount of increase in government expenditure if marginal propensity to consume is

equal to the investment-income ratio in the investment function.

E None of the above

Correct Answer D

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9 Question Description The deficit on current account implies

A Exports of merchandize goods, invisibles is less than imports of merchandize goods, invisibles

B Foreign direct investment in the country is more than exports

C Domestic industries are financed more by the international financial institutes than local financial institutions

D Exports of merchandize goods are less than merchandize imports

E None of the above

Correct Answer A

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10 Question Description The Keynesian remedy for unemployment is to 

A Decrease aggregate demand.

B Reduce tax rates or lower interest rates.

C Decrease government spending.

D Decrease private consumption and investment.

E None of the above

Correct Answer B

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11 Question Description If the marginal benefit from another computer exceeds the marginal cost of the computer, then to use resources efficiently,

A I f the marginal benefit exceeds the marginal cost by as much as possible, the efficient amount of resources are being used to

produce computers.

B Fewer resources should be used to produce computers.

C More resources should be used to produce computers.

D None of the above is correct because marginal benefit and marginal cost have nothing to do with using resources efficiently.

E None of the above

Correct Answer C

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12 Question Description If RBI wants to ‘sterilize’ an inflow of foreign exchange, it should

A Lower the bank rate

B Lower the CRR

C Sell government securities in the open market

D Increase the repo rate

E None of the above

Correct Answer C

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13 Question Description Which of the following best describes ‘venture capital’?

A Venture capital is a type of financing provided by large, established companies to small, early-stage startups.

B Venture capital is a type of financing provided by banks and financial institutions to small, early-stage startups.

C Venture capital is a type of financing provided by wealthy individuals or firms to small, early-stage startups in exchange for an

ownership stake in the company.

D Venture capital is a type of financing provided by the government to small, early-stage startups.

E None of the above

Correct Answer C

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14 Question Description If the government subsidizes producers in a perfectly competitive market, then

A The demand for the product will increase

B The demand for the product will decrease

C The consumer surplus will increase

D The consumer surplus will decrease

E None of the above

Correct Answer C

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15 Question Description Consider the following liquid assets:

1.Demand deposits with the banks

2.Time deposits with the banks

3.Savings deposits with the banks

4.Currency

The correct sequence of these decreasing orders of Liquidity is:

A 1-4-3-2

B 4-3-2-1

C 2-3-1-4

D 4-1-3-2

E None of the above

Correct Answer D

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16 Question Description Which of the following statements is correct?

A If the NPV of a project is greater than 0, its PI will equal 0.

B If the IRR of a project is 0%, its NPV, using a discount rate, k, greater than 0, will be 0.

C If the PI of a project is less than 1, its NPV should be less than 0.

D If the IRR of a project is greater than the discount rate, k, its PI will be less than 1 and its NPV will be greater than 0.

E None of the above

Correct Answer C

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17 Question Description Recently, European Union (EU) members have agreed to implement a minimum tax rate. Consider the following statements

regarding Global Minimum Tax:

1.)It aims to apply a standard minimum tax rate to a defined corporate income base worldwide.

2.)This framework encourages nations to have tax competition through lower tax rates.

3.)It aims to promote tax competition between governments to attract foreign investment.

Which of the statements given above is/are correct?

A 1 only

B 1 and 2 only

C 2 and 3 only

D 1, 2 and 3

E None of the above

Correct Answer A

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18 Question Description Which of the following best describes a cartel?

A An organization of independent firms producing similar products that work together to raise prices and restrict output.

B An organization of independent firms producing different products that work together to raise prices and restrict output.

C An organization of interdependent firms producing different products that work together to raise prices and restrict output.

D An independent body set up by the government against oligopolistic firms.

E None of the above

Correct Answer A

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19 Question Description Consider the following statements:

1.) Capital Receipts indicate the receipts which lead to a decrease in assets or an increase in liabilities of the government.

2.) Capital expenditure is used to create assets or to reduce liabilities.

Which of the statements given above is/are correct?

A 1 only

B 2 only

C Both 1 and 2

D Neither 1 nor 2

E None of the above

Correct Answer C

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20 Question Description Which of the following best explains the cascading effect of taxation?

(1) When tax imposition leads to a disproportionate increase in prices by an extent more than the rise in the tax.

(2) When tax imposition leads to a disproportionate decrease in prices by an extent more than the rise in the tax.

(3) When tax imposition leads to a disproportionate decrease in imports.

(4) When tax imposition leads to a disproportionate decrease in exports.

A 1 only

B 2 and 3 only

C 4 only

D 3 and 1 only

E None of the above

Correct Answer A

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21 Question Description In Stock Market parlance, the term “Automatic stabilizers” refer to

A Inherent mechanisms in the stock market that automatically cause stock market gains to be cancelled out by losses, which make

expected long-run returns equal to zero

B The invisible hand mechanisms which automatically bring the economy out of a recession

C Government revenue and expenditure items that change automatically in response to changes in economic activity

D Discretionary monetary policy manoeuvres designed to keep inflation under control automatically

E None of the above

Correct Answer C

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22 Question Description Pareto efficiency occurs when

A There is no way to reorganize production so that it will increase the satisfaction of one person without reducing the satisfaction of

another person

B There is no way to reorganize consumption so that it will increase the satisfaction of one person without reducing the satisfaction of

another person

C N o reorganization of production and consumption is possible by which some individuals are made better off without making

someone else worse off

D There is no way to reorganize production or consumption so that it will increase the satisfaction of one person by reducing the

satisfaction of another person

E None of the above

Correct Answer C

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23 Question Description Victor currently produces nuts and bolts at point a in the figure. Victor's marginal cost of producing an additional nut is ________.

A 8/6 bolts

B 1/2 bolt

C 1 bolt

D 8 bolts

E None of the above

Correct Answer C

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24 Question Description Which of the following statements is/are true about the impact of inflation in the economy?

A Unanticipated inflation hurts the fixed income earners most.

B Higher than expected inflation hurts creditors but benefits debtors.

C Inflation creates inefficiency in the economy because it forces people to search for prices when they could be doing something else.

D All of the above.

E None of the above

Correct Answer D

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25 Question Description According to the supply side of the vicious circle theory of development, a country is poor because

A Technology levels do not allow for self-sufficiency.

B It was previously too poor to save and invest.

C Underemployment is too widespread.

D Resource allocation is poor.

E None of the above

Correct Answer B

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26 Question Description Which among the following is NOT an assumption of Pareto optimality?

A Every consumer wishes to maximize his level of satisfaction.

B All the factors of production are used in the production of every commodity.

C Conditions of perfect competition exist making all the factors of production perfectly mobile

D The concept of utility is cardinal and cardinal utility function of every consumer is given.

E None of the above

Correct Answer D

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27 Question Description Recently, RBI launched India's first pilot project of Central Bank Digital Currency (CBDC), consider the following statements regarding CBDC.

1.)CBDCs are a digital form of paper currency and like crypto currencies, they work on a decentralised network.

2.)It is the same as a fiat currency and is exchangeable one-to-one with the fiat currency.

3.)CBDC can be transacted using wallets backed by block chain.

4.)Bahamas is the first economy to launch its nationwide CBDC named Sand Dollar.

Which of the statements given above is/are correct?

A 1 and 2 only

B 2 and 4 only

C 1 and 3 only

D 2, 3 and 4 only

E None of the above

Correct Answer D

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28 Question Description Wiseman‐Peacock hypotheses supports in a much stronger manner the possibility of

A An upward trend in public expenditure

B A downward trend in public expenditure

C A constancy of public expenditure

D A mixed trend in public expenditure

E None of the above

Correct Answer A

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