760+ Indian Economy Quiz Questions and Answers with Explanation

Q:

The __________ exchange rate is the price of one unit of foreign currency in terms of domestic currency.

A) Artificial	B) Nominal
C) Fixed	D) Real

Answer & Explanation Answer: B) Nominal

Explanation:

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Q:

Insure payment of minimum wages for tea leave pickers

A) will improve quality of tea.	B) will reduce unemployment of tea leave pickers.
C) decreases unemployment.	D) will increase picking cost for all tea companies.

Answer & Explanation Answer: D) will increase picking cost for all tea companies.

Explanation:

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Q:

__________ says that if we keep increasing the employment of an input, with other inputs fixed, eventually a point will be reached after which the resulting addition to output (i.e., marginal product of that input) will start falling.

A) Law of diminishing marginal product	B) Law of variable proportions
C) The Short Run	D) The Long Run

Answer & Explanation Answer: A) Law of diminishing marginal product

Explanation:

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Q:

As per RBI In October 2017, Gross Non-Performing Assets (GNPA) ratio for NBFCs increased to what percentage till March 2017?

A) 2	B) 5
C) 10	D) 20

Answer & Explanation Answer: B) 5

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Q:

As per the announcement by the government in August 2017, Banks importing gold and precious metals will have to pay ______ tax under the GST.

A) 5%	B) 10%
C) 3%	D) 8%

Answer & Explanation Answer: C) 3%

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Q:

Rate of the growth of an economy is measured in terms of

A) National income	B) Monthly family income
C) Number of people who have been lifted above the poverty line	D) Industrial Development

Answer & Explanation Answer: A) National income

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Q:

Which one of the following is not an assumption in the law of demand?

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.

Answer & Explanation Answer: C) 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.

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Q:

The relation between the consumer’s optimal choice of the quantity of a good and its price is very important and this relation is called the ________ function.

A) Price	B) Substitution
C) Supply	D) Demand

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