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Generate QuizEconomics – Fill in the Blank – GK Questions
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According to the Law of ___ Utility, the additional satisfaction a consumer gains from consuming one more unit of a good decreases as the total consumption of that good increases.
- Diminishing Marginal
- Lewis
- 1965
- indirect
Answer: Diminishing Marginal
This fundamental law explains why demand curves slope downward. As a person consumes more units of a specific commodity (like glasses of water on a hot day), the urgency and satisfaction derived from each successive unit fall, eventually reaching zero (satiety) or even becoming negative if overconsumption occurs.
The ___ model of economic growth posits that long-term per capita economic growth is driven primarily by exogenous technological progress, rather than just capital accumulation and labor force expansion.
- frictional
- Washington
- Tarapore
- Solow (or Solow-Swan)
Answer: Solow (or Solow-Swan)
The Neoclassical Solow-Swan growth model demonstrates that merely adding more capital and labor will eventually lead to diminishing returns. It concludes that sustained, long-term increases in living standards and per capita income can only be achieved through continuous, exogenous technological advancements that improve total factor productivity.
The 'JAM Trinity', which has been instrumental in the successful implementation of Direct Benefit Transfers (DBT) and reducing leakages in welfare schemes, stands for Jan Dhan, Aadhaar, and ___.
- technological
- low (or zero / no)
- Solow (or Solow-Swan)
- Mobile
Answer: Mobile
The JAM (Jan Dhan-Aadhaar-Mobile) number trinity links the beneficiary's bank account (Jan Dhan) with their unique biometric identity (Aadhaar) and their registered mobile number. This technological architecture ensures that government subsidies are transferred directly to the intended beneficiary's account, eliminating ghost beneficiaries and middlemen.
The Special Drawing Rights (SDR), an international reserve asset created by the IMF to supplement its member countries' official reserves, is colloquially known as ___.
- stagflation
- Paper Gold
- IDRCL (or India Debt Resolution Company Ltd)
- jobless growth
Answer: Paper Gold
The SDR was created in 1969 during the Bretton Woods fixed exchange rate system when gold and the US dollar were the primary reserve assets. Because it was intended to act as a synthetic substitute for gold in international settlements, despite existing only as a bookkeeping entry, it earned the nickname 'Paper Gold'.
The Balance of Payments (BOP) is a systematic record of all economic transactions between the residents of a reporting country and the rest of the world over a specific period, and it must always ___ in an accounting sense.
- Green
- balance (or sum to zero)
- collusion
- OPHI
Answer: balance (or sum to zero)
The BOP follows the double-entry bookkeeping system. Therefore, the sum of the Current Account, the Capital Account, and the Financial Account, along with changes in official foreign exchange reserves, must mathematically equal zero. A deficit in the current account must be perfectly offset by a surplus in the capital/financial accounts or by drawing down forex reserves.
The Insurance Regulatory and Development Authority of India (IRDAI) was established as a statutory body in the year ___ to regulate and promote the insurance industry.
- first
- 1999
- Pareto Efficiency (or Pareto Optimality)
- crowding out
Answer: 1999
Following the recommendations of the R.N. Malhotra Committee, the IRDA was constituted in 1999 and later given statutory status through the IRDA Act, 1999. Its mandate includes issuing licenses to private and foreign insurers, protecting policyholder interests, and ensuring the orderly growth of the insurance sector in India.
In the Indian money market, funds borrowed for a period ranging from 2 days to 14 days are technically referred to as ___ money.
- notice
- rivalrous (or unregulated common)
- 1999
- 2011-12
Answer: notice
The inter-bank money market is highly segmented by maturity. 'Call money' refers to overnight borrowing (1 day) to meet immediate reserve requirements. 'Notice money' covers short-term borrowing from 2 to 14 days, where the borrower must give a short 'notice' before repaying the funds.
The Insolvency and Bankruptcy Code (IBC), 2016, shifted the insolvency resolution paradigm in India from a 'debtor-in-possession' model to a '___-in-control' model.
- Okun's
- health and education
- Veblen
- creditor
Answer: creditor
Prior to the IBC, defaulting promoters retained control of their companies while restructuring debts, often leading to endless delays. The IBC empowers the Committee of Creditors (CoC) to take control of the defaulting entity, allowing them to either approve a resolution plan to revive the company or liquidate its assets within a strict 330-day timeline.
When the RBI wants to inject durable liquidity into the banking system and lower long-term interest rates, it conducts Open Market Operations (OMOs) by ___ government securities.
- purchasing (or buying)
- 40
- lending (or credit)
- tangent
Answer: purchasing (or buying)
When the RBI purchases government bonds from the open market, it pays for them by crediting the reserves of commercial banks. This infusion of permanent cash increases the banks' lendable resources, expands the money supply, and drives down bond yields, thereby lowering long-term borrowing costs for the economy.
The Goods and Services Tax (GST), which subsumed multiple indirect taxes to create a unified national market, is a ___-based tax levied on the supply of goods and services.
- social
- destination (or consumption)
- Paris
- milk
Answer: destination (or consumption)
GST is a destination-based consumption tax, meaning the tax revenue accrues to the state where the goods or services are ultimately consumed, rather than the state where they are manufactured. This shift from an origin-based tax system fundamentally altered the fiscal dynamics between manufacturing-heavy states and consumption-heavy states in India.
The Primary Deficit is calculated by subtracting ___ payments from the total Fiscal Deficit, thereby showing the government's current borrowing requirement exclusive of past debt obligations.
- Solow (or Solow-Swan)
- gig
- short
- interest
Answer: interest
The Fiscal Deficit represents the total borrowing needs of the government. However, a large portion of this borrowing is often just to pay the interest on accumulated past debts. By subtracting interest payments, the Primary Deficit reveals how much the government is borrowing purely to fund its current fiscal year's expenditures.
According to ___ Law, a 1% increase in the unemployment rate will cause a country's GDP to be roughly 2% lower than its potential GDP.
- Population
- FEMA
- short
- Okun's
Answer: Okun's
Arthur Okun's empirical law highlights the severe macroeconomic cost of unemployment. It quantifies the loss in national output resulting from idle labor resources, demonstrating that high unemployment not only causes social distress but also creates a massive negative output gap relative to the economy's full-employment potential.
The economic phenomenon where inflation remains persistently high in specific sectors like food and energy, while remaining stable or falling in other sectors, is referred to as ___.
- 3.5
- long
- Population
- Skewflation
Answer: Skewflation
Skewflation poses a unique challenge for central banks because standard monetary tightening (raising interest rates) might successfully curb general demand but fail to address supply-side bottlenecks in specific sectors like agriculture. This can lead to a situation where raising rates unnecessarily stifles overall economic growth without solving the targeted inflation.
The GDP Deflator is a measure of the level of prices of all new, domestic goods and services in an economy, and it is calculated as the ratio of ___ GDP to Real GDP multiplied by 100.
- Production
- Consumer Price Index (CPI)
- Countercyclical
- Nominal
Answer: Nominal
The GDP Deflator reflects the price changes of all domestically produced goods and services, making it a broader and more comprehensive measure of inflation than the CPI or WPI. By dividing Nominal GDP (calculated at current year prices) by Real GDP (calculated at base year prices), it isolates the exact impact of inflation on economic growth.
Gross National Product (GNP) is calculated by adding ___ to the Gross Domestic Product (GDP) of a country.
- durable (or capital / physical)
- Net Factor Income from Abroad (NFIA)
- multiplier
- product
Answer: Net Factor Income from Abroad (NFIA)
While GDP measures the value of goods and services produced within a country's geographical boundaries regardless of nationality, GNP measures the total value produced by the residents of a country, both domestically and abroad. Therefore, GNP = GDP + (Factor income earned by domestic residents abroad - Factor income earned by foreign residents domestically).
The Index of Industrial Production (IIP) currently uses ___ as its base year for calculating the growth rates of industrial output in India.
- 2011-12
- construction (or real estate / infrastructure)
- multiplier
- notice
Answer: 2011-12
The base year for the IIP was updated from 2004-05 to 2011-12 in May 2017 to align it with the base years of other major macroeconomic indicators like the GDP and WPI. This update also revised the item basket to better reflect the current structure of the Indian manufacturing and industrial sectors.
The National Food Security Act (NFSA), 2013, legally entitles up to ___% of the rural population to receive highly subsidized food grains under the Targeted Public Distribution System (TPDS).
- isoquant
- Refinery Products
- 75
- Tarapore
Answer: 75
The NFSA, 2013, marks a paradigm shift from a welfare approach to a rights-based approach to food security. It mandates coverage of up to 75% of the rural population and 50% of the urban population (averaging about 67% of India's total population), providing them with 5 kg of food grains per person per month at heavily subsidized prices.
The Swaminathan Commission recommended that the Minimum Support Price (MSP) should be at least 50% more than the ___ cost of production to ensure fair remuneration for farmers.
- C2 (or Comprehensive)
- India Debt Resolution Company Ltd (IDRCL)
- 1999
- Countercyclical
Answer: C2 (or Comprehensive)
The C2 cost is the most comprehensive measure of production costs, including imputed rent on owned land and interest on owned capital assets, in addition to actual paid-out costs (A2) and family labor (FL). While the government currently uses the A2+FL formula for MSP, the Swaminathan Commission advocated for the C2+50% formula to ensure true economic viability for farmers.
The Kisan Credit Card (KCC) scheme, which provides farmers with timely access to credit for agricultural needs, was introduced in the year ___.
- government spending (or autonomous expenditure)
- banks
- inflation
- 1998
Answer: 1998
The KCC scheme was launched in 1998 based on the recommendations of the R.V. Gupta Committee. It revolutionized rural credit by providing flexible, low-cost working capital loans to farmers, reducing their dependence on exploitative informal moneylenders and ensuring timely availability of seeds, fertilizers, and pesticides.
The 'Tragedy of the Commons' describes a situation where individuals acting in their own self-interest deplete a shared, ___ resource.
- long
- rivalrous (or unregulated common)
- six
- Pigouvian
Answer: rivalrous (or unregulated common)
Coined by Garrett Hardin, this concept applies to common-pool resources like fisheries or grazing land, which are rivalrous (one's use reduces another's) but non-excludable. Without property rights or regulation, individuals overconsume, leading to the eventual destruction of the resource for everyone.