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This set of Indian Economy Multiple Choice Questions & Answers (MCQs) focuses on Currency and Inflation Set 2

Q1 | Who among the following are not protected against inflation.? [Railways 1992]
  • Salaried class
  • Industrial workers
  • Pensioners
  • Agricultural farmers
Q2 | An essential attribute of inflation is:
  • fall in production
  • increase in prices
  • absence of black market
  • presence of black market
Q3 | The best means of saving during inflation is to keep:
  • money
  • Government Bonds
  • equity
  • time deposits with Banks
Q4 | The period of high inflation and low economic growth is termed as: [RRB 1992]
  • stagnation
  • take-off stage in economy
  • stagflation
  • none of these
Q5 | Stagflation implies a case of: [CDS 1992]
  • galloping inflation
  • recession plus inflation
  • adverse balance of trade
  • rising wages and employment
Q6 | Inflation can be contained by:
  • surplus budget
  • increase in taxation
  • reduction in public expenditure
  • all the above
Q7 | Deficit financing creates additional paper currency to fill the gap between expenditureand revenue. This device aims at economic development but if it fails, it generates : [IFS 1990]
  • inflation
  • devaluation
  • deflation
  • demonetization
Q8 | A steady increase in the general level of prices as a result of excessive increase in aggregate demand as compared to aggregate supply is termed as : [CDS 1999]
  • demand-pull inflation
  • cost-push inflation
  • stagflation
  • structural inflation
Q9 | A high rate of inflation tends to worsen balance of payments because:
  • prices of imported goods rise
  • prices of exported goods rise making exports less competitive
  • prices of imported goods fall and hence more is imported
  • prices of exported goods fall and hence less amount is obtained in terms of foreign exchange
Q10 | The effect of inflation on tax revenue results in a situation known as :
  • stagflation
  • fiscaldrag
  • reflation
  • disinflation
Q11 | The sum of which of the following constitutes Broad Money in India? [IAS 1997] 1. Currency with the public 2. Demand deposits with banks 3. Time deposits with banks 4. Other deposits with RBI Choose the correct answer using the codes given below:
  • 1 and 2
  • 1, 2 and 3
  • 1, 2, 3 and 4
  • 1, 2 and 4
Q12 | Rising prices lead to all but one of the following:
  • promotion of inequalities
  • generation of black money
  • adverse effect on balance of payments
  • adverse effect on speculation
Q13 | Consider the following statements about Wholesale Price Index (WPI) : 1. It captures the price movement extensively and is, therefore, taken as an indicator of inflation. 2. The office of the Economic adviser (OEA) is entrusted with the function of compilation and publication of the weekly wholesale price index number in India. Which of the statements given above is/are correct? [CDS 2009]
  • I only
  • II only
  • Both I and II
  • Neither I nor II
Q14 | In the last one decade, which one among the following sectors has attracted the highestForeign Direct Investment inflows into India? [IAS 2004]
  • Chemicals other than fertilizers
  • Services sector
  • Food processing
  • Telecommunication
Q15 | Under the Constitution, the power to raise and disburse public funds:
  • has been vested in Union Government
  • has been divided between the Union and State Governments
  • has been given to the Finance Commission
  • has not been given to anyone
Q16 | There are three major groups of commodities in the Wholesale Price Index. These are: 1. primary articles 2. fuel, power, light and lubricants 3. manufactured products 4. food articles and industrial raw materials
  • 1, 2 and 3
  • 2, 3 and 4
  • 1, 3 and 4
  • 1 and 3
Q17 | Rupee was devalued by what percent in July 1991 ? [MP PCS 1990]
  • 18
  • 20
  • 22
  • 25
Q18 | When was decimal coinage introduced in India? [CDS 2005]
  • 1947
  • 1950
  • 1957
  • 1960
Q19 | Amongst the currency quotes USD/JPY, USD/Euro and USD/CAD, which one of thefollowing is referred as the base currency for quotes? [Punjab & Sindh Bank 2011]
  • US $
  • JPY
  • Euro
  • CAD
Q20 | Which of the following is/are treated as artificial currency? [IAS 2010]
  • ADR
  • GDR
  • SDR
  • Both ADR and SDR
Q21 | Which of the following measures should be taken when an economy is going throughinflationary pressures? 1. The direct taxes should be increased. 2. The interest rate should be reduced. 3. The public spending should be increased Select the correct answer using the code given below: [CDS 2012] Code:
  • 1 only
  • 2 only
  • 2 and 3
  • 1 and 2
Q22 | The terms of economics, the recession occurring two times with a small gap in betweenis known as [Bank of India PO 2010]
  • Double Deflation
  • Deflation
  • Deep Recession
  • Double Dip Recession
Q23 | M1 includes:
  • currency with public
  • demand deposit with bank
  • other deposits with RBI
  • all of the above
Q24 | M3 includes:
  • M1 + T.D
  • M1 + post office saving deposit
  • M1 +- post office total deposit
  • M1 + national saving certificate
Q25 | Consider the following statements: Full convertibility of the rupee may mean: [IAS 2002] 1. its free float with other international currencies. 2. its direct exchange with any other international currency at any prescribed place inside and outside the country. 3. it acts just like any other international currency. Which of these statements are correct?
  • 1 and 2
  • 1 and 3
  • 2 and 3
  • 1, 2 and 3