A deflationary gap exists when: MCQ with Answer and Explanation

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A deflationary gap exists when:

A. prices rise rapidly

B. aggregate demand is less than full employment output

C. aggregate demand exceeds full employment output

D. the economy is above full employment

Answer: Option B

Solution (By JKSSB Mock Tests)

A deflationary gap occurs when aggregate demand is below the level needed for full employment output.

This question belongs to: Economy GK Economy Set 1

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Practice More Economy Set 1 Questions

Question #1

The 'Goods and Services Tax' Council was constituted in which year?

A. 2017

B. 2014

C. 2018

D. 2016

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Correct Answer: Option D

Explanation:
The GST Council was constituted in 2016.

This question belongs to: Economy GK Economy Set 1

Question #2

Which of the following is a feature of the Indian agricultural sector?

A. Complete independence from monsoon

B. High capital intensity comparable to industry

C. High and uniform productivity across states

D. Predominance of small and marginal farmers

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Correct Answer: Option D

Explanation:
Indian agriculture is dominated by small and marginal landholdings, leading to challenges of scale, productivity and access to credit and technology.

This question belongs to: Economy GK Economy Set 1

Question #3

The 'Goods and Services Tax' on electricity transmission and distribution is:

A. 5%

B. not under GST

C. 18%

D. 0%

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Correct Answer: Option B

Explanation:
Electricity transmission and distribution are outside GST.

This question belongs to: Economy GK Economy Set 1

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