Economics (Part – IX)

Total Questions: 50

21. Lowering of value of currency relative to a foreign reference currency is called_________. [S.S.C. Online CHSL (T-I), 8.01, 2017 (Shift-I)]

Correct Answer: (a) Devaluation
Solution:One meaningful way to address the balance of payments imbalance is by devaluing the country's foreign exchange rate. Devaluation means reducing the external value of the country's currency. Under this, there is no change in the internal purchasing power of money.

22. What happens to Indian exports when Indian rupee is devalued? [S.S.C. Online CHSL (T-I) 4.08.2021 (Shift-I)]

Correct Answer: (d) Exports become cheaper
Solution:Exports become cheaper when the Indian rupee is devalued. A country may devalue its currency to combat trade balances. It means the exports are less expensive and more competitive in the global market and the imports are more expensive so that people use domestic products.

23. If there is a lack of money supply in comparison to the supply of goods and services, then the possible consequence would be________. [S.S.C. Online C.G.L. (T-I) 4.06.2019 (Shift-III)]

Correct Answer: (d) Deflation
Solution:

If there is a lack of money supply in comparison to the supply of goods and services, then the possible consequence would be deflation.

24. Select the appropriate answer from the given options to fill the following sentence. [S.S.C. Online Stenographer, 13.09.2017 (Shift-II)]

Market goods generally ________ by currency  inflation.

Correct Answer: (a) become expensive
Solution:Inflation makes market goods expensive. Inflation causes money to expand, which increases the purchasing power of the people. As a result, demand also increases, but the purchasing power of money decreases, which ultimately causes goods to become expensive.

25. What do you call a proportionate saving in costs gained by an increased level of production? [S.S.C. Online CGL (T-I) 24.08.2021 (Shift-II)]

Correct Answer: (a) Economies of scale
Solution:The proportionate savings in cost achieved by in-creased levels of production are called economies of scale. Companies can achieve economies of scale by increasing production and reducing costs.

26. Depreciation is an annual allowance for the wear and tear of________. [S.S.C. Online C.G.L. (T-I) 5.03.2020 (Shift-II)]

Correct Answer: (a) capital goods
Solution:Depreciation is an annual allowance for the wear and tear of capital goods.

27. The base financial year for the calculation of the all India Index of Industrial Production (IIP)is: [S.S.C. Online C.G.L. (T-I) 7.06.2019(Shift-III)]

Correct Answer: (d) 2011-2012
Solution:The base financial year for the calculation of the all India Index of Industrial Production (IIP) is 2011-2012. IIP index shows the performance of different industrial sectors of the economy of India. It is published on a monthly basis by CSO (Central Statistical Organisation).

28. The Consumer Price Index or CPI is an index used to calculate the of a country. [S.S.C. JE Mechanical Exams 22.03.2021 (Shift-I)]

Correct Answer: (c) Retail inflation
Solution:The Consumer Price Index (CPI) is an index used to calculate the country's retail inflation. The Consumer Price Index measures the average change in prices over time.

29. 'Residex' is associated with : [S.S.C. Online C.G.L.(T-I) 30.08.2016 (Shift-II)]

Correct Answer: (d) Land prices
Solution:The RESIDEX was first launched in 2007 by the National Housing Bank (NHB) to provide an index of residential prices in India across cities and over time. It is the first housing price index in India. It was launched in order to fill the price information gap and to streamline the process of development of property in various cities across the country.

30. An increase in price will_______. [S.S.C. Online CHSL (T-I) 3.02.2017(Shift-II)]

Correct Answer: (b) decrease consumer surplus
Solution:Consumer's savings depend on the price. Hence the consumer's savings will change according to the change in price. If there is a decrease in the price of a commodity, the consumer's savings will increase, but when the price increases, the consumer's savings (surplus) will decrease.

In the figure, if the price decreases from OP to DP the consumer's savings will increase from RP,E, and if the price increases to OP, the consumers' savings will decrease to RP₂E₂.