Demand-pull inflation is caused by: MCQ with Answer and Explanation

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Demand-pull inflation is caused by:

A. an increase in production costs

B. a fall in money supply

C. decrease in government expenditure

D. aggregate demand exceeding aggregate supply at full employment

Answer: Option D

Solution (By JKSSB Mock Tests)

Demand-pull inflation occurs when aggregate demand exceeds aggregate supply.

This question belongs to: Economy GK Economy Set 1

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Question #1

Which of the following is a feature of the Indian monetary system?

A. Gold standard

B. Managed floating exchange rate with inflation targeting

C. Complete free floating without RBI role

D. Fixed exchange rate without any intervention

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Correct Answer: Option B

Explanation:
India follows a managed floating exchange rate regime and has adopted a flexible inflation targeting framework for monetary policy.

This question belongs to: Economy GK Economy Set 1

Question #2

The 'New Economic Policy 1991' was introduced under which Prime Minister?

A. P.V. Narasimha Rao

B. Atal Bihari Vajpayee

C. Manmohan Singh

D. Rajiv Gandhi

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Correct Answer: Option A

Explanation:
The New Economic Policy of 1991 was introduced under Prime Minister P.V. Narasimha Rao.

This question belongs to: Economy GK Economy Set 1

Question #3

Which of the following is a feature of the Mahalanobis model used in Indian planning?

A. Complete reliance on private sector investment

B. Focus on export-led growth only

C. Emphasis on heavy industries and capital goods sector

D. Emphasis on agriculture and consumer goods

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Correct Answer: Option C

Explanation:
The Mahalanobis model, used in the Second Five Year Plan, stressed the development of heavy and capital goods industries to build a strong industrial base.

This question belongs to: Economy GK Economy Set 1

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