QUIZ – 2020: Insights Static Quiz, 22 January 2020 – Economy
INSIGHTS STATIC QUIZ 2019
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Question 1 of 5
1. Question
A shortage of investible capital in an economy can result from
- Low savings
- Very high and erratic inflation
- Low borrowing costs
Select the correct answer code:
Correct
Solution: c)
High and erratic inflation deters investors from making investment decisions because real returns on investments are uncertain.
Savings forms the base of the money that is borrowed for infrastructure building in the economy. Low savings and high demand of capital lead to high borrowing costs and deter investors.
Incorrect
Solution: c)
High and erratic inflation deters investors from making investment decisions because real returns on investments are uncertain.
Savings forms the base of the money that is borrowed for infrastructure building in the economy. Low savings and high demand of capital lead to high borrowing costs and deter investors.
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Question 2 of 5
2. Question
Aggregate demand is an important economic indicator. It can be increased by
- More investments
- Higher Taxation
- Increasing bank rate by RBI
Select the correct answer code:
Correct
Solution: a)
Aggregate demand is the total demand for final goods and services in an economy at a given time.
Investment creates infrastructure, generates demand for raw material, labor, provides employment and adds to the productive capacity of the economy. It is one of the most potent factors in increasing Aggregate demand (AD).
The government has some ability to impact AD. It can give fiscal stimulus or increase taxes in order to influence how consumers spend or save. An expansionary fiscal policy (higher spending, lower taxes) causes AD to increase, while a contractionary monetary policy (e.g. high bank rates) causes AD to decrease.
Incorrect
Solution: a)
Aggregate demand is the total demand for final goods and services in an economy at a given time.
Investment creates infrastructure, generates demand for raw material, labor, provides employment and adds to the productive capacity of the economy. It is one of the most potent factors in increasing Aggregate demand (AD).
The government has some ability to impact AD. It can give fiscal stimulus or increase taxes in order to influence how consumers spend or save. An expansionary fiscal policy (higher spending, lower taxes) causes AD to increase, while a contractionary monetary policy (e.g. high bank rates) causes AD to decrease.
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Question 3 of 5
3. Question
‘Economic efficiency’ as used by economists and policymakers is related to which of the following?
- Equal allocation of goods and services to all consumers and corporations.
- Resource efficient production
Select the correct answer code:
Correct
Solution: b)
Economic efficiency is when goods and services are distributed according to consumer preferences and needs of corporations. It is when the maximum number of goods and services are produced with a given amount of inputs.
Incorrect
Solution: b)
Economic efficiency is when goods and services are distributed according to consumer preferences and needs of corporations. It is when the maximum number of goods and services are produced with a given amount of inputs.
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Question 4 of 5
4. Question
Consider the following statements about Gross Domestic Product (GDP).
- It is the aggregate value of goods and services produced within the domestic territory of a country.
- It includes the replacement investment of the depreciation of capital stock.
Which of the above statements is/are correct?
Correct
Solution: c)
Gross Domestic Product (GDP) Aggregate value of goods and services produced within the domestic territory of a country. It includes the replacement investment of the depreciation of capital stock. (Glossary of class 12 – Macroeconomics)
Incorrect
Solution: c)
Gross Domestic Product (GDP) Aggregate value of goods and services produced within the domestic territory of a country. It includes the replacement investment of the depreciation of capital stock. (Glossary of class 12 – Macroeconomics)
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Question 5 of 5
5. Question
Consider the statements regarding Systemically Important Financial Institutions (SIFIs)
- The idea of SIFI has emerged from the Pittsburgh summit of World Bank.
- Systemically Important Financial Institutions (SIFIs) are perceived as institutions that are Too Big to Fail (TBTF).
Which of the above statements is/are correct?
Correct
Solution: b)
Systemically Important Financial Institutions (SIFIs) as institutions “whose distress or disorderly failure, because of their size, complexity and systemic interconnectedness, would cause significant disruption to the wider financial system and economic activity”.
- At global level, based on the suggestion of G-20 Leaders in Pittsburgh summit in 2009, FSB spearheads the efforts of formulating a framework for assessing and regulating SIFIs.
• Systemically Important Financial Institutions (SIFIs) are perceived as institutions that are Too Big to Fail (TBTF).
Incorrect
Solution: b)
Systemically Important Financial Institutions (SIFIs) as institutions “whose distress or disorderly failure, because of their size, complexity and systemic interconnectedness, would cause significant disruption to the wider financial system and economic activity”.
- At global level, based on the suggestion of G-20 Leaders in Pittsburgh summit in 2009, FSB spearheads the efforts of formulating a framework for assessing and regulating SIFIs.
• Systemically Important Financial Institutions (SIFIs) are perceived as institutions that are Too Big to Fail (TBTF).
