Previous Part 1 is Here
Part 2: Macroeconomic Concepts (Beginner to Intermediate Level)
101. Which of the following is a leakage from the circular flow of income?
(a) Investment
(b) Government spending
(c) Exports
(d) Savings
Answer: (d)
102. Which of the following is an injection into the circular flow of income?
(a) Imports
(b) Taxes
(c) Savings
(d) Government spending
Answer: (d)
103. The aggregate demand curve shows the relationship between:
(a) Price level and quantity supplied
(b) Price level and quantity demanded
(c) Income and consumption
(d) Savings and investment
Answer: (b)
104. A decrease in the general price level leads to a ______ in aggregate demand.
(a) Decrease
(b) Increase
(c) No change
(d) Proportional decrease
Answer: (b)
105. The aggregate supply curve shows the relationship between:
(a) Price level and quantity demanded
(b) Price level and quantity supplied
(c) Income and savings
(d) Investment and capital stock
Answer: (b)
106. In the short run, the aggregate supply curve is typically:
(a) Vertical
(b) Horizontal
(c) Upward sloping
(d) Downward sloping
Answer: (c)
107. In the long run, the aggregate supply curve is typically:
(a) Upward sloping
(b) Horizontal
(c) Vertical
(d) Downward sloping
Answer: (c)
108. The equilibrium level of output and price in the macroeconomy is determined by the intersection of:
(a) Aggregate demand and aggregate savings
(b) Aggregate supply and aggregate investment
(c) Aggregate demand and aggregate supply
(d) Consumption and investment
Answer: (c)
109.Which of the following is a tool of fiscal policy?
(a) Repo rate
(b) Open market operations
(c) Government spending
(d) Cash reserve ratio
Answer: (c)
110. Expansionary fiscal policy involves:
(a) Decreasing government spending and increasing taxes
(b) Increasing government spending and/or decreasing taxes
(c) Increasing the money supply
(d) Decreasing the money supply
Answer: (b)
111. Contractionary fiscal policy involves:
(a) Increasing government spending and/or decreasing taxes
(b) Decreasing government spending and/or increasing taxes
(c) Increasing the money supply
(d) Decreasing the money supply
Answer: (b)
112. The main aim of expansionary fiscal policy is to:
(a) Control inflation
(b) Reduce government debt
(c) Stimulate economic growth
(d) Increase the budget surplus
Answer: (c)
113. The main aim of contractionary fiscal policy is to:
(a) Stimulate economic growth
(b) Reduce unemployment
(c) Control inflation
(d) Increase government spending
Answer: (c)
114. Which of the following is a tool of monetary policy?
(a) Taxation
(b) Government budget
(c) Repo rate
(d) Public debt
Answer: (c)
115. The repo rate is the rate at which:
(a) Commercial banks borrow from the central bank
(b) The central bank borrows from commercial banks
(c) Commercial banks lend to the public
(d) The central bank lends to the government
Answer: (a)
116. A decrease in the repo rate by the central bank will likely lead to:
(a) A decrease in the money supply
(b) An increase in the money supply
(c) No change in the money supply
(d) An increase in the inflation rate without affecting money supply
Answer: (b)
117. The reverse repo rate is the rate at which:
(a) Commercial banks borrow from the central bank
(b) The central bank borrows from commercial banks
(c) Commercial banks lend to the public
(d) The central bank lends to the government
Answer: (b)
118. The Cash Reserve Ratio (CRR) is the fraction of a commercial bank's total deposits that it must keep with:
(a) Other commercial banks
(b) The central bank
(c) The government
(d) Its own vaults
Answer: (b)
119. An increase in the CRR by the central bank will likely lead to:
(a) An increase in the lending capacity of commercial banks
(b) A decrease in the lending capacity of commercial banks
(c) No change in the lending capacity of commercial banks
(d) A decrease in the inflation rate without affecting lending capacity
Answer: (b)
120. The Statutory Liquidity Ratio (SLR) is the fraction of a commercial bank's total deposits that it must maintain in the form of:
(a) Cash only
(b) Unencumbered approved government securities, cash, and gold
(c) Deposits with other commercial banks
(d) Loans to priority sectors
Answer: (b)
121. Open market operations refer to the:
(a) Lending of money by commercial banks to the public
(b) Borrowing of money by commercial banks from the central bank
(c) Buying and selling of government securities by the central bank
(d) Trading of stocks and bonds in the stock market
Answer: (c)
122. When the central bank sells government securities in the open market, it leads to:
(a) An increase in the money supply
(b) A decrease in the money supply
(c) No change in the money supply
(d) An increase in the inflation rate
Answer: (b)
123. The bank rate (or discount rate) is the rate at which:
(a) Commercial banks lend to each other
(b) Commercial banks borrow from the central bank
(c) The central bank lends to the government
(d) The public borrows from commercial banks
Answer: (b)
124. Inflation caused by an increase in aggregate demand is called:
(a) Cost-push inflation
(b) Demand-pull inflation
(c) Stagflation
(d) Hyperinflation
Answer: (b)
125. Inflation caused by an increase in the costs of production is called:
(a) Demand-pull inflation
(b) Cost-push inflation
(c) Deflation
(d) Disinflation
Answer: (b)
126. Hyperinflation refers to:
(a) A mild increase in the price level
(b) A rapid, excessive, and out-of-control general price increase in an economy
(c) A decrease in the inflation rate
(d) A sustained decrease in the general price level
Answer: (b)
127. Deflation refers to:
(a) A sustained increase in the general price level
(b) A sustained decrease in the general price level
(c) A temporary decrease in the price of a few goods
(d) An increase in the unemployment rate
Answer: (b)
128. Disinflation refers to:
(a) An increase in the inflation rate
(b) A decrease in the inflation rate, but still positive
(c) A sustained decrease in the general price level
(d) A period of very high inflation
Answer: (b)
129. The Phillips curve shows the short-run relationship between:
(a) Inflation and economic growth
(b) Inflation and unemployment
(c) Interest rates and inflation
(d) Money supply and inflation
Answer: (b)
130. According to the Phillips curve, there is typically a ______ relationship between inflation and unemployment in the short run.
(a) Positive
(b) Negative
(c) No clear
(d) Proportional
Answer: (b)
131. Stagflation is a situation characterized by:
(a) High growth and low inflation
(b) Low growth and high inflation
(c) High growth and high inflation
(d) Low growth and low inflation
Answer: (b)
132. The natural rate of unemployment is the unemployment rate that exists when the economy is at:
(a) Its lowest possible output level
(b) Full employment
(c) Zero inflation
(d) Maximum cyclical unemployment
Answer: (b)
133. Cyclical unemployment is caused by:
(a) Structural changes in the economy
(b) Seasonal variations in employment
(c) Fluctuations in the business cycle
(d) Individuals voluntarily being between jobs
Answer: (c)
134. Frictional unemployment is caused by:
(a) A mismatch of skills and available jobs
(b) Seasonal variations in employment
(c) Recessions in the economy
(d) Individuals voluntarily being between jobs
Answer: (d)
135. Structural unemployment is caused by:
(a) Short-term mismatches between job seekers and job openings
(b) Seasonal changes in labor demand
(c) Fundamental changes in the structure of the economy, such as technological advancements or shifts in industry
(d) Downturns in the business cycle
Answer: (c)
136. The multiplier effect suggests that an initial change in autonomous spending (like investment or government spending) leads to a:
(a) Smaller change in aggregate demand
(b) Larger change in aggregate demand
(c) No change in aggregate demand
(d) Proportional change in aggregate supply
Answer: (b)
137. The size of the multiplier depends on the:
(a) Inflation rate
(b) Marginal propensity to consume (MPC)
(c) Unemployment rate
(d) Interest rate
Answer: (b)
138. A higher marginal propensity to consume (MPC) leads to a ______ multiplier.
(a) Smaller
(b) Larger
(c) No change in the
(d) Negative
Answer: (b)
139. The accelerator effect suggests that a change in the rate of growth of output can lead to a change in the level of:
(a) Consumption
(b) Investment
(c) Government spending
(d) Exports
Answer: (b)
140. Crowding out refers to the phenomenon where increased government borrowing leads to:
(a) Lower interest rates and increased private investment
(b) Higher interest rates and decreased private investment
(c) No change in interest rates or private investment
(d) Increased inflation and decreased private investment
Answer: (b)
141. The Quantity Theory of Money states that there is a direct and proportional relationship between:
(a) Money supply and interest rates
(b) Money supply and the price level
(c) Interest rates and the price level
(d) Government spending and national income
Answer: (b)
142. The equation of exchange in the Quantity Theory of Money is given by:
(a) M + V = P + Q
(b) M × V = P × Y
(c) M / V = P / Y
(d) M - V = P - Y
(Where M is money supply, V is velocity of money, P is price level, and Y is real output)
Answer: (b)
143. Velocity of money refers to the:
(a) Rate at which the central bank prints money
(b) Number of times a unit of money changes hands during a given period
(c) Total amount of money in circulation
(d) Inverse of the price level
Answer: (b)
144. Keynesian economics emphasizes the role of ______ in influencing aggregate demand and economic activity.
(a) Money supply
(b) Government intervention
(c) Supply-side factors
(d) Rational expectations
Answer: (b)
145. Classical economics emphasizes the role of ______ in determining output and employment in the long run.
(a) Government spending
(b) Monetary policy
(c) Supply-side factors and self-regulating markets
(d) Aggregate demand
Answer: (c)
146. The concept of "liquidity trap" is associated with:
(a) High inflation rates
(b) Very low interest rates where monetary policy becomes ineffective
(c) High unemployment rates
(d) Rapid economic growth
Answer: (b)
147. The Laffer curve illustrates the relationship between tax rates and tax revenue, suggesting that:
(a) Higher tax rates always lead to higher tax revenue
(b) Lower tax rates always lead to higher tax revenue
(c) There is a tax rate beyond which further increases will lead to lower tax revenue
(d) Tax rates have no impact on tax revenue
Answer: (c)
148. Supply-side economics focuses on policies that aim to:
(a) Increase aggregate demand
(b) Increase aggregate supply
(c) Control inflation through monetary policy
(d) Reduce income inequality through fiscal policy
Answer: (b)
149. Examples of supply-side policies include:
(a) Increasing government spending on infrastructure
(b) Reducing taxes on businesses and investment
(c) Lowering interest rates
(d) Increasing social welfare programs
Answer: (b)
150. Rational expectations theory suggests that economic agents form expectations about the future based on:
(a) Past trends only
(b) All available information and use it intelligently
(c) Government announcements only
(d) Random guesses
Answer: (b)
151. The concept of "moral hazard" arises when:
(a) One party in a transaction has more information than the other
(b) Individuals or firms take on more risk because they are insured or protected from the consequences
(c) There is a lack of transparency in the market
(d) Government regulations distort market outcomes
Answer: (b)
152. The concept of "adverse selection" arises when:
(a) Individuals or firms take on more risk than they should
(b) One party in a transaction has more information than the other, leading to inefficient outcomes
(c) There is excessive government intervention in the economy
(d) Markets fail to allocate resources efficiently due to externalities
Answer: (b)
153. A public good is characterized by:
(a) Rivalry and excludability
(b) Non-rivalry and non-excludability
(c) Rivalry and non-excludability
(d) Non-rivalry and excludability
Answer: (b)
154.Examples of public goods include:
(a) National defense and clean air
(b) Food and clothing
(c) Private education and healthcare
(d) Toll roads and electricity
Answer: (a)
155. A common resource is characterized by:
(a) Non-rivalry and non-excludability
(b) Rivalry and non-excludability
(c) Non-rivalry and excludability
(d) Both rivalry and excludability, but provided by the government
Answer: (b)
156.The "tragedy of the commons" refers to the overuse and depletion of:
(a) Public goods
(b) Common resources
(c) Private goods
(d) Club goods (non-rivalrous but excludable)
Answer: (b)
157. An externality occurs when:
(a) The price of a good does not reflect its true cost or benefit to society
(b) Government intervention distorts market prices
(c) There is a lack of competition in the market
(d) Consumers do not have enough information about a product
Answer: (a)
158. A negative externality imposes a cost on:
(a) The producer only
(b) The consumer only
(c) A third party who is not directly involved in the production or consumption
(d) Both the producer and the consumer
Answer: (c)
159. Pollution is an example of a:
(a) Positive externality
(b) Negative externality
(c) Public good
(d) Common resource
Answer: (b)
160. A positive externality provides a benefit to:
(a) The producer only
(b) The consumer only
(c) A third party who is not directly involved in the production or consumption
(d) Both the producer and the consumer
Answer: (c)
Part 2: Macroeconomic Concepts (Beginner to Intermediate Level) - Continued
161. Education can generate a:
(a) Negative externality
(b) Positive externality
(c) Public bad
(d) Private cost
Answer: (b)
162. GDP deflator is a measure of:
(a) Real GDP
(b) Nominal GDP
(c) The price level of all new, domestically produced, final goods and services in an economy
(d) The unemployment rate
Answer: (c)
163. The formula for GDP deflator is:
(a) (Nominal GDP / Real GDP) × 100
(b) (Real GDP / Nominal GDP) × 100
(c) Nominal GDP - Real GDP
(d) Real GDP - Nominal GDP
Answer: (a)
164.Real GDP is nominal GDP adjusted for:
(a) Population growth
(b) Changes in the price level (inflation or deflation)
(c) Government spending
(d) International trade
Answer: (b)
165. The Consumer Price Index (CPI) measures the average change over time in the prices of:
(a) All goods and services produced in an economy
(b) A basket of goods and services purchased by urban consumers
(c) Raw materials used in production
(d) Stocks and bonds
Answer: (b)
166. The base year in the calculation of CPI has an index value of:
(a) 0
(b) 1
(c) 100
(d) 1000
Answer: (c)
167. Inflation rate based on CPI is calculated as:
(a) (CPI in current year - CPI in previous year) / CPI in current year × 100
(b) (CPI in current year - CPI in previous year) / CPI in previous year × 100
(c) (CPI in current year / CPI in previous year) × 100
(d) CPI in current year - CPI in previous year
Answer: (b)
168. Core inflation excludes the prices of:
(a) Manufactured goods
(b) Services
(c) Volatile items like food and energy
(d) Luxury goods
Answer: (c)
169. Headline inflation includes the prices of:
(a) Only essential goods
(b) Only non-essential goods
(c) All goods and services in the CPI basket
(d) Goods and services excluding government-controlled prices
Answer: (c)
170. The Fisher equation describes the relationship between nominal interest rates, real interest rates, and expected inflation as:
(a) Nominal interest rate = Real interest rate + Expected inflation rate
(b) Real interest rate = Nominal interest rate + Expected inflation rate
(c) Nominal interest rate = Real interest rate - Expected inflation rate
(d) Expected inflation rate = Nominal interest rate + Real interest rate
Answer: (a)
171."Gresham's Law" states that:
(a) Good money drives out bad money
(b) Bad money drives out good money
(c) The quantity of money determines the price level
(d) Inflation is always and everywhere a monetary phenomenon
Answer: (b)
172.The Bretton Woods system, established after World War II, was a:
(a) System of freely floating exchange rates
(b) System of fixed exchange rates pegged to the US dollar, which was convertible to gold
(c) System with no international monetary order
(d) System based on multiple reserve currencies
Answer: (b)
173. The International Monetary Fund (IMF) primarily aims to:
(a) Promote international trade
(b) Foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.
(c) Provide long-term loans for development projects
(d) Regulate international financial markets
Answer: (b)
174. The World Bank primarily aims to:
(a) Promote international trade
(b) Foster global monetary cooperation
(c) Provide financial and technical assistance to developing countries for development projects
(d) Regulate international financial markets
Answer: (c)
175. Devaluation of a country's currency under a fixed exchange rate system makes its exports ______ and imports ______.
(a) Cheaper, cheaper
(b) Cheaper, more expensive
(c) More expensive, cheaper
(d) More expensive, more expensive
Answer: (b)
176. Depreciation of a country's currency under a floating exchange rate system makes its exports ______ and imports ______.
(a) Cheaper, cheaper
(b) Cheaper, more expensive
(c) More expensive, cheaper
(d) More expensive, more expensive
Answer: (b)
177. Appreciation of a country's currency under a floating exchange rate system makes its exports ______ and imports ______.
(a) Cheaper, cheaper
(b) More expensive, cheaper
(c) Cheaper, more expensive
(d) More expensive, more expensive
Answer: (b)
178. The exchange rate is the:
(a) Price of goods and services traded internationally
(b) Value of one currency expressed in terms of another currency
(c) Interest rate charged on international loans
(d) Tariff imposed on imported goods
Answer: (b)
179. A floating exchange rate system is one where the exchange rate is determined by:
(a) The central bank
(b) The government
(c) Market forces of demand and supply
(d) International agreements
Answer: (c)
180. A fixed exchange rate system is one where the exchange rate is:
(a) Constantly changing
(b) Pegged to another currency or a basket of currencies
(c) Determined by market forces
(d) Non-existent
Answer: (b)
181.Managed float is an exchange rate system where the central bank:
(a) Does not intervene in the foreign exchange market
(b) Allows the exchange rate to be freely determined by market forces
(c) Intervenes occasionally to influence the exchange rate without fixing it
(d) Pegs the exchange rate to another currency
Answer: (c)
182. Purchasing Power Parity (PPP) theory suggests that exchange rates should adjust to equalize:
(a) Interest rates across countries
(b) The prices of identical goods and services in different countries
(c) Inflation rates across countries
(d) Economic growth rates across countries
Answer: (b)
183. The Balance of Trade (BOT) refers to the difference between a country's:
(a) Total exports and total imports of goods and services
(b) Total exports and total imports of goods only
(c) Total capital inflows and total capital outflows
(d) Total revenue and total expenditure
Answer: (b)
184. A current account deficit in the Balance of Payments means that a country is:
(a) Exporting more goods and services than it is importing
(b) Importing more goods and services and making more transfer payments than it is exporting and receiving
(c) Having more capital inflows than capital outflows
(d) Its official reserves are increasing
Answer: (b)
185.A capital account surplus in the Balance of Payments means that a country is:
(a) Exporting more goods and services than it is importing
(b) Importing more goods and services than it is exporting
(c) Having more capital inflows than capital outflows
(d) Its official reserves are decreasing
Answer: (c)
186. Special Drawing Rights (SDRs) are:
(a) Gold reserves held by the IMF
(b) An international reserve asset created by the IMF
(c) Currencies of major industrialized countries
(d) Loans provided by the World Bank
Answer: (b)
187. The concept of "twin deficits" refers to the simultaneous occurrence of:
(a) High inflation and high unemployment
(b) Budget deficit and current account deficit
(c) Fiscal deficit and trade surplus
(d) Low growth and low inflation
Answer: (b)
188. Automatic stabilizers are:
(a) Discretionary fiscal policy measures
(b) Fiscal policy measures that automatically adjust to economic fluctuations
(c) Monetary policy tools used by the central bank
(d) Exchange rate management policies
Answer: (b)
189. Examples of automatic stabilizers include:
(a) Tax cuts and increased government spending during a recession
(b) Unemployment benefits and progressive income taxes
(c) Changes in the repo rate
(d) Open market operations
Answer: (b)
190. Discretionary fiscal policy involves:
(a) Automatic adjustments in government spending and taxation
(b) Deliberate changes in government spending and taxation to influence aggregate demand
(c) Rules-based fiscal policy
(d) Fiscal policy implemented by local governments
Answer: (b)
191. The burden of national debt is likely to be lower if:
(a) The debt is held entirely by foreigners
(b) The rate of economic growth is higher than the interest rate on the debt
(c) The government runs persistent budget deficits
(d) The debt is used to finance unproductive activities
Answer: (b)
192. Seigniorage refers to the:
(a) Profit made by commercial banks on lending
(b) Revenue earned by the government from printing money
(c) Interest paid by the government on its debt
(d) Fees charged by the central bank for its services
Answer: (b)
193. The "Tobin tax" is a proposal for a tax on:
(a) Corporate profits
(b) International financial transactions
(c) Consumption of luxury goods
(d) Carbon emissions
Answer: (b)
194. Financial inclusion refers to:
(a) The increasing integration of global financial markets
(b) The availability and accessibility of financial services to all segments of the population
(c) The regulation of financial institutions
(d) The promotion of stock market participation
Answer: (b)
195. Microfinance is the provision of small-scale financial services to:
(a) Large corporations
(b) High-income individuals
(c) Low-income individuals and small businesses
(d) Government agencies
Answer: (c)
196. Sustainable development goals (SDGs) are a set of ______ global goals adopted by the United Nations.
(a) 8
(b) 12
(c) 17
(d) 20
Answer: (c)
197. The concept of "circular economy" emphasizes:
(a) A linear "take-make-dispose" model of production and consumption
(b) Keeping resources in use for as long as possible, extracting the maximum value from them whilst in use, then recovering and regenerating products and materials at the end of each service life.
(c) Maximizing the extraction of natural resources
(d) Focusing solely on recycling waste
Answer: (b)
198. The "Green Revolution" in India refers to a period of:
(a) Significant increase in industrial production
(b) Significant increase in agricultural production due to new technologies
(c) Focus on environmental conservation
(d) Expansion of the service sector
Answer: (b)
199. Land reforms in India aimed primarily at:
(a) Increasing agricultural exports
(b) Redistributing land ownership to reduce inequality
(c) Promoting industrialization in rural areas
(d) Encouraging the cultivation of cash crops
Answer: (b)
200. The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) in India aims to:
(a) Provide unemployment benefits to urban workers
(b) Guarantee wage employment for at least 100 days in a financial year to every rural household whose adult members volunteer to do unskilled manual work.
(c) Promote skill development among rural youth
(d) Provide financial assistance for rural infrastructure projects
Answer: (b)
Alright, that concludes Part 2! Are you ready to move on to Part 3, which will likely cover more advanced macroeconomic and Indian economic concepts?
You May Also Like :-
- What Are Tribunals and Why Does India Need Them?
- Origin of Indian Constitution Complete Story
- 500-repeated-history-qs-ssc-cgl-upsc
What is the syllabus for the Economy section in SSC CGL?
The Economy syllabus for SSC CGL is part of the General Awareness section. Key areas include basic economic concepts, Indian economy (structure, sectors, development), national income, money and banking, inflation, fiscal policy, budget, five-year plans (now NITI Aayog), poverty, unemployment, international trade, and important economic organizations.How many questions can I expect from the Economy section in SSC CGL Tier 1?
Typically, you can expect around 2-3 questions from the Economy section in SSC CGL Tier 1. While the weightage isn't very high in Tier 1, these marks are still crucial.
Which are the most important topics to focus on in SSC CGL Economy?
Based on previous year trends, high-weightage topics often include:
- Basic Economic Concepts (GDP, GNP, Inflation, Deflation)
- Monetary and Fiscal Policy (RBI, Repo Rate, Budget, Taxation)
- Indian Economy (Five-Year Plans/NITI Aayog, Agriculture, Industry, Services)
- Poverty and Unemployment
- Money and Banking
Do I need to study both Micro and Macro Economics for SSC CGL?
The focus is generally more on Macroeconomics and the Indian Economy. However, a basic understanding of microeconomic principles like demand and supply can be helpful in understanding broader economic concepts.
Is it important to study the Five-Year Plans since NITI Aayog has replaced them?
Yes, understanding the objectives and models of the Five-Year Plans is still important as questions related to their impact and achievements can be asked. You should also focus on the functions and initiatives of NITI Aayog.