Economy Set 1 MCQs

Economy GK

Economy Set 1 MCQs

Practice Economy GK MCQs on basic economic concepts including economy, economics, microeconomics, macroeconomics, goods and services, demand and supply, factors of production, opportunity cost, economic activities, sectors of economy and other fundamental concepts frequently asked in SSC, Railway, Banking, UPSC, JKSSB, JKPSC, Police, Defence and other competitive examinations.

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Practice Questions

Page 40 of 111
Question #781
Which of the following is a characteristic of the 'Green New Deal' type of policy proposals?
A. Only voluntary private-sector initiatives
B. Only market-based carbon pricing without public investment
C. Only austerity measures
D. Large-scale public investment programmes aimed at simultaneously addressing climate change, economic inequality and job creation
Discuss
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Correct Answer: Option D

Explanation:
Green New Deal proposals typically combine ambitious climate targets with large public investment in clean energy and infrastructure, together with social policies intended to ensure a just transition.
This question belongs to: Economy GK Economy Set 1
Question #782
In the context of international climate finance, the 'Loss and Damage' agenda refers to:
A. Only mitigation finance
B. Support for developing countries facing irreversible impacts of climate change that cannot be adapted to
C. Only private insurance markets
D. Only adaptation finance within national borders
Discuss
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Correct Answer: Option B

Explanation:
Loss and damage refers to the adverse effects of climate change that cannot be avoided through mitigation or adaptation; the agenda seeks financial and technical support for particularly vulnerable countries.
This question belongs to: Economy GK Economy Set 1
Question #783
Which of the following is a feature of the 'Carbon Border Adjustment Mechanism' proposals?
A. A levy on imports based on their embedded carbon content to prevent carbon leakage and protect domestic climate policies
B. A complete ban on all imports
C. Only export subsidies for green goods
D. Only domestic carbon taxes without border measures
Discuss
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Correct Answer: Option A

Explanation:
A carbon border adjustment mechanism imposes a charge on imported goods equivalent to the domestic carbon price, thereby reducing the risk of carbon leakage and maintaining the competitiveness of domestic producers.
This question belongs to: Economy GK Economy Set 1
Question #784
The concept of 'Stranded Assets' in the energy transition refers to:
A. Only newly created green assets
B. Only fully depreciated assets
C. Assets that suffer unanticipated write-downs or devaluations because of climate-related risks and the shift to a low-carbon economy
D. Only financial assets unrelated to the real economy
Discuss
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Correct Answer: Option C

Explanation:
Stranded assets are those that lose economic value prematurely as a result of changes associated with the energy transition, such as policy shifts, technological change or shifts in demand away from fossil fuels.
This question belongs to: Economy GK Economy Set 1
Question #785
Which of the following is a characteristic of the 'Just Energy Transition Partnerships'?
A. International partnerships that provide financial and technical support to developing countries for a just and equitable transition away from coal and other fossil fuels
B. Only domestic energy policies without international support
C. Only rapid phase-outs without social safeguards
D. Only private-sector initiatives without public finance
Discuss
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Correct Answer: Option A

Explanation:
Just Energy Transition Partnerships are collaborative arrangements in which developed countries and international institutions mobilise finance and expertise to support developing countries in transitioning away from coal while protecting affected workers and communities.
This question belongs to: Economy GK Economy Set 1
Question #786
In the context of measuring inequality, the 'Palma Ratio' is defined as:
A. The ratio of the income share of the top 10 per cent to that of the bottom 40 per cent
B. The share of the middle 50 per cent only
C. The Gini coefficient multiplied by 100
D. The ratio of the top 1 per cent to the bottom 1 per cent
Discuss
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Correct Answer: Option A

Explanation:
The Palma ratio is the ratio of the income share of the richest 10 per cent of the population to that of the poorest 40 per cent; it focuses on the tails of the distribution that account for most inequality.
This question belongs to: Economy GK Economy Set 1
Question #787
Which of the following is a feature of the 'Wealth Inequality' literature associated with Piketty?
A. Capital accumulation always reduces inequality
B. Only labour income inequality matters
C. When the rate of return on capital exceeds the growth rate of the economy, wealth inequality tends to rise
D. Wealth inequality always declines with development
Discuss
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Correct Answer: Option C

Explanation:
Piketty’s central argument is that when the rate of return on capital (r) systematically exceeds the growth rate of the economy (g), the share of capital in national income and the concentration of wealth tend to increase.
This question belongs to: Economy GK Economy Set 1
Question #788
The concept of 'Pre-distribution' in policy debates refers to:
A. Only post-tax outcomes
B. Only monetary policy
C. Policies that shape the distribution of market incomes before taxes and transfers, such as education, minimum wages and competition policy
D. Only redistribution through taxes and transfers
Discuss
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Correct Answer: Option C

Explanation:
Pre-distribution emphasises interventions that affect the underlying distribution of market incomes—through skills, bargaining power, market structure and institutions—rather than relying solely on subsequent fiscal redistribution.
This question belongs to: Economy GK Economy Set 1
Question #789
Which of the following is a characteristic of the 'Universal Basic Services' proposal?
A. Only targeted residual welfare
B. Only private provision of all services
C. Public provision of a range of essential services free at the point of use as a complement or alternative to basic income
D. Only cash transfers without any public services
Discuss
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Correct Answer: Option C

Explanation:
Universal basic services advocates the collective provision of a set of essential services—such as health, education, housing, transport and information—available to all citizens free or at low cost.
This question belongs to: Economy GK Economy Set 1
Question #790
In the context of labour-market institutions, the 'Ghent System' refers to:
A. A pure market system without any unions
B. Only private insurance markets
C. A system in which trade unions play a major role in the administration of unemployment insurance, contributing to high union density
D. Only government-run unemployment insurance with no union role
Discuss
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Correct Answer: Option C

Explanation:
The Ghent system, historically associated with certain Nordic and Low Countries, links unemployment benefits to union membership or administration, thereby providing a selective incentive for workers to join unions.
This question belongs to: Economy GK Economy Set 1
Question #791
Which of the following is a feature of the 'Job Guarantee' proposal?
A. Only private-sector job creation without public involvement
B. Only unemployment insurance without job offers
C. Only training programmes without employment
D. A public programme that offers employment at a living wage to anyone willing and able to work
Discuss
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Correct Answer: Option D

Explanation:
A job-guarantee programme commits the public sector to provide a job at a basic living wage to every person who wants one, thereby eliminating involuntary unemployment and establishing an effective wage floor.
This question belongs to: Economy GK Economy Set 1
Question #792
The concept of 'Degrowth' in ecological economics advocates:
A. Unlimited economic growth
B. The complete abandonment of all economic activity
C. Only growth in developing countries
D. A planned reduction of energy and resource throughput in high-income countries to bring the economy within ecological limits while improving well-being
Discuss
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Correct Answer: Option D

Explanation:
Degrowth is a school of thought that calls for a democratically planned downscaling of production and consumption in over-consuming countries in order to achieve ecological sustainability and social justice.
This question belongs to: Economy GK Economy Set 1
Question #793
Which of the following is a characteristic of the 'Foundational Economy' approach?
A. Focus only on financial services
B. Focus on the essential goods and services that keep citizens safe, healthy and educated, often provided collectively
C. Focus only on luxury consumption
D. Focus only on high-tech export sectors
Discuss
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Correct Answer: Option B

Explanation:
The foundational economy comprises the everyday goods and services—utilities, food, health, education, care—that are essential for civilised life and are often most effectively provided through collective arrangements.
This question belongs to: Economy GK Economy Set 1
Question #794
In the context of global economic governance, the 'Bridgetown Initiative' is associated with:
A. Only bilateral aid without systemic reform
B. Only monetary-policy coordination among advanced economies
C. Proposals to reform the international financial architecture to better address climate vulnerability and development needs of small and vulnerable states
D. Only trade liberalisation
Discuss
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Correct Answer: Option C

Explanation:
The Bridgetown Initiative, championed by Barbados, calls for major reforms of the global financial system—including debt relief, new liquidity instruments and scaled-up climate finance—to meet the needs of climate-vulnerable developing countries.
This question belongs to: Economy GK Economy Set 1
Question #795
Which of the following is a feature of the 'Special Drawing Rights' allocation by the IMF?
A. SDRs are only available to countries with balance-of-payments needs under strict conditionality
B. A general allocation of SDRs provides unconditional liquidity to member countries in proportion to their quotas
C. SDRs can be used only for domestic fiscal spending
D. SDRs are a form of private cryptocurrency
Discuss
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Correct Answer: Option B

Explanation:
A general SDR allocation distributes new SDRs to all IMF members in proportion to their quotas, thereby increasing global liquidity without the policy conditionality attached to IMF lending programmes.
This question belongs to: Economy GK Economy Set 1
Question #796
The concept of 'Common but Differentiated Responsibilities' in international environmental law means that:
A. Only developed countries have any responsibility
B. All countries have identical obligations
C. Only developing countries have responsibility
D. All countries share responsibility for environmental protection but the nature and extent of obligations differ according to capabilities and historical contributions
Discuss
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Correct Answer: Option D

Explanation:
The principle of common but differentiated responsibilities recognises that while all states are responsible for addressing global environmental problems, their respective obligations differ according to their capacities and their historical contributions to the problem.
This question belongs to: Economy GK Economy Set 1
Question #797
Which of the following is a characteristic of the 'Loss and Damage Fund' established under the UNFCCC?
A. A fund only for mitigation projects in developed countries
B. A fund limited to adaptation within national borders of developed countries
C. A fund to assist developing countries that are particularly vulnerable to the adverse effects of climate change in responding to loss and damage
D. A private insurance mechanism without public finance
Discuss
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Correct Answer: Option C

Explanation:
The Loss and Damage Fund, agreed at COP27 and operationalised subsequently, is intended to provide financial assistance to developing countries that are especially vulnerable to climate-related loss and damage.
This question belongs to: Economy GK Economy Set 1
Question #798
In the context of measuring progress beyond GDP, the 'Human Development Index' combines indicators of:
A. Only subjective well-being
B. Life expectancy, education and per capita income
C. Only income and inequality
D. Only environmental sustainability
Discuss
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Correct Answer: Option B

Explanation:
The Human Development Index is a composite index of three basic dimensions of human development: a long and healthy life (life expectancy), knowledge (education) and a decent standard of living (GNI per capita).
This question belongs to: Economy GK Economy Set 1
Question #799
Which of the following is a feature of the 'Multidimensional Poverty Index'?
A. It measures only inequality
B. It measures only income poverty
C. It is based only on national accounts data
D. It captures deprivations in health, education and living standards at the household level
Discuss
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Correct Answer: Option D

Explanation:
The Multidimensional Poverty Index identifies multiple overlapping deprivations suffered by households in the domains of health, education and living standards, providing a more comprehensive picture of poverty than income alone.
This question belongs to: Economy GK Economy Set 1
Question #800
The concept of 'Subjective Well-Being' in economics refers to:
A. Only environmental quality
B. Only physical health indicators
C. Only objective measures of income
D. Individuals’ own evaluations of their lives, typically measured by surveys of happiness or life satisfaction
Discuss
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Correct Answer: Option D

Explanation:
Subjective well-being encompasses self-reported measures of happiness, life satisfaction and emotional states, which have become an important complement to traditional objective indicators of welfare.
This question belongs to: Economy GK Economy Set 1
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