Economic Terms, Deficits and Indices MCQs

Solved MCQs explaining key economic terms for SSC and banking exams: GDP and GNP, inflation types, deficits, balance of payments, HDI and the Gini coefficient.

1. 1

   GDP at market prices minus indirect taxes plus subsidies gives:

   APersonal incomeBNet National ProductCGNPDGDP at factor cost

   Correct answer: D. GDP at factor cost

   Factor cost measures what producers actually receive, so indirect taxes are removed and subsidies added back.

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2. 2

   Gross National Product (GNP) equals GDP plus:

   Anet factor income from abroadBdepreciationCindirect taxesDgovernment spending

   Correct answer: A. net factor income from abroad

   GNP counts income earned by a country's residents anywhere, so net income from abroad is added to GDP.

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3. 3

   Deflation means:

   Aa sustained fall in the general price levelBa fall in the rupee's valueCa rise in interest ratesDa fall in GDP for two quarters

   Correct answer: A. a sustained fall in the general price level

   During deflation prices fall over time; it is the opposite of inflation.

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4. 4

   Stagflation is a situation of:

   Alow inflation and high growthBhigh inflation along with stagnant growth and high unemploymentCa balanced budgetDfalling prices and rising jobs

   Correct answer: B. high inflation along with stagnant growth and high unemployment

   Stagflation combines stagnation and inflation, as many economies saw in the 1970s oil crisis.

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5. 5

   The Human Development Index (HDI) is published by the:

   AWorld BankBWTOCIMFDUNDP

   Correct answer: D. UNDP

   The United Nations Development Programme publishes the HDI in its Human Development Report.

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6. 6

   The Gini coefficient is used to measure:

   Aincome inequalityBliteracyCpopulation growthDinflation

   Correct answer: A. income inequality

   It ranges from 0 (perfect equality) to 1 (one person has all the income).

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7. 7

   India's financial (fiscal) year runs from:

   A1 January to 31 DecemberB1 April to 31 MarchC1 July to 30 JuneD1 October to 30 September

   Correct answer: B. 1 April to 31 March

   The Union Budget and government accounts follow the April–March year.

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8. 8

   Revenue deficit is:

   Aimports minus exportsBrevenue expenditure minus revenue receiptsCtotal expenditure minus total receiptsDfiscal deficit minus interest payments

   Correct answer: B. revenue expenditure minus revenue receipts

   It shows how far the government's day-to-day income falls short of its day-to-day spending.

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9. 9

   Primary deficit is:

   Atotal debt of the governmentBrevenue deficit plus capital receiptsCfiscal deficit minus interest paymentsDimports minus exports

   Correct answer: C. fiscal deficit minus interest payments

   Removing interest payments shows how much of the borrowing is for current needs rather than for past debt.

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10. 10

    Disguised unemployment, where more people work than are needed, is most common in:

    Ainformation technologyBagricultureCmanufacturing exportsDbanking

    Correct answer: B. agriculture

    On small family farms, removing some workers would not reduce output; their productivity is close to zero.

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12. 11

    Banking, insurance and transport belong to which sector of the economy?

    ASecondaryBQuaternary onlyCPrimaryDTertiary (services)

    Correct answer: D. Tertiary (services)

    The tertiary sector provides services; agriculture is primary and manufacturing is secondary.

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13. 12

    "Laissez-faire" refers to an economic policy of:

    Afixed pricesBheavy state controlChigh import dutiesDminimal government interference in business

    Correct answer: D. minimal government interference in business

    The French phrase means "let do": markets are left largely to themselves.

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14. 13

    Devaluation of a currency means:

    Aa rise in interest ratesBan official reduction in its exchange value against other currenciesCprinting more notesDremoving old notes from circulation

    Correct answer: B. an official reduction in its exchange value against other currencies

    Devaluation makes exports cheaper and imports costlier for that country.

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15. 14

    The Balance of Payments records:

    Aonly exports of goodsBall economic transactions of a country with the rest of the worldConly the government's budgetDonly foreign loans

    Correct answer: B. all economic transactions of a country with the rest of the world

    It has a current account (trade, income, transfers) and a capital account (investment and loans).

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16. 15

    The current account of the Balance of Payments includes:

    Aforeign direct investmentBchanges in foreign reserves onlyCtrade in goods and services, income and transfersDexternal commercial borrowing

    Correct answer: C. trade in goods and services, income and transfers

    Investment flows and loans belong to the capital (financial) account.

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17. 16

    Per capita income is calculated as:

    Anational income ÷ populationBGDP × populationCtotal savings ÷ householdsDexports ÷ imports

    Correct answer: A. national income ÷ population

    It is the average income per person in a year.

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18. 17

    Extremely rapid, out-of-control inflation is called:

    AhyperinflationBdisinflationCdeflationDcreeping inflation

    Correct answer: A. hyperinflation

    During hyperinflation prices may rise many times over within months. Disinflation means a slowing rate of inflation.

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19. 18

    Demand-pull inflation happens when:

    Athe government cuts spendingBimports become cheaperCtotal demand exceeds the supply of goods and servicesDproduction costs rise

    Correct answer: C. total demand exceeds the supply of goods and services

    It is often described as "too much money chasing too few goods". Rising production costs cause cost-push inflation.

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20. 19

    A progressive tax is one in which:

    Aonly companies pay taxBeveryone pays the same amountCthe tax rate rises as income risesDthe poor pay a higher rate

    Correct answer: C. the tax rate rises as income rises

    India's income tax slabs are progressive: higher incomes are taxed at higher rates.

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21. 20

    A "bull market" in shares means:

    Aprices are fallingBonly government bonds are tradedCtrading is suspendedDprices are rising

    Correct answer: D. prices are rising

    A bull market has rising prices and optimism; a bear market has falling prices.

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