For Higher income increasing demand for a normal good, identify the economic interpretation.
Correct answer: D
At each given price consumers demand more.
Economy
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Evaluate the two proposed answers. Which are supported? I. Demand responding weakly to a percentage price change — the economic interpretation: Market equilibrium. II. An effective maximum price below equilibrium — the economic interpretation: Binding price ceiling.
Correct answer: C
I is incorrect: Demand responding weakly to a percentage price change → Inelastic demand. The absolute price elasticity is below one. II is correct: An effective maximum price below equilibrium → Binding price ceiling. It can create excess demand in a simple competitive model.
What does a fall in the inflation rate while prices still rise describe?
Correct answer: D
Prices rise more slowly but do not necessarily fall.
Which sector includes crop cultivation and fishing?
Correct answer: A
It directly uses natural resources.
Which tax is typically collected through the supply of goods or services?
Correct answer: D
Such taxes are commonly passed through transaction prices.
What is a budget shortfall excluding interest payments called?
Correct answer: A
Primary deficit equals fiscal deficit minus interest payments.
Which unemployment occurs when more workers are engaged than are needed for the same output?
Correct answer: C
Some workers can be removed without reducing output.
Which market structure has a few dominant firms?
Correct answer: B
Each firm's decisions can affect the others.
Which GDP measure removes the effect of price changes using a base-year valuation?
Correct answer: D
Real GDP is used to compare production volumes over time.
Which sector includes banking and transport services?
Correct answer: B
It provides services rather than primary extraction or manufacturing.
What is the annual financial statement of expected government receipts and expenditure commonly called?
Correct answer: D
A budget presents fiscal plans for a financial year.
Which institution is India's central bank?
Correct answer: A
The RBI performs monetary and central-banking functions.
Which tax has a burden intended to fall directly on the taxpayer charged?
Correct answer: D
Income tax is a standard example of a direct tax.
Which unemployment arises during movement between jobs?
Correct answer: A
Job search and matching take time.
Which measure values final goods and services produced within a country's territory?
Correct answer: B
GDP measures domestic production over a period.
What is output per unit of input called?
Correct answer: C
Higher productivity means more output for a given input.
Which sector includes manufacturing?
Correct answer: A
It transforms materials into products.
Which good is both non-rival and non-excludable in the standard economic definition?
Correct answer: D
One person's consumption does not reduce another's and exclusion is difficult.
Which market has a single seller and significant entry barriers?
Correct answer: C
A monopoly lacks direct sellers of the same product in its market.
Which unemployment reflects a mismatch between workers' skills and available jobs?
Correct answer: D
Changes in production can alter the skills employers need.
What is a cost imposed on others without compensation called?
Correct answer: A
Pollution is a common example of an external cost.
Which GDP measure uses current-period prices?
Correct answer: B
It can change because of both prices and quantities.
What is a sustained fall in the general price level called?
Correct answer: D
Deflation differs from a slowdown in inflation.
What is the difference between total expenditure and receipts excluding borrowings called?
Correct answer: A
It measures the government's borrowing requirement under this definition.
What is the excess of revenue expenditure over revenue receipts called?
Correct answer: C
It indicates that revenue receipts do not cover revenue spending.