In the consumption function C = a + bY, 'a' represents: MCQ with Answer and Explanation

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In the consumption function C = a + bY, 'a' represents:

A. saving

B. marginal propensity to consume

C. autonomous consumption

D. investment

Answer: Option C

Solution (By JKSSB Mock Tests)

In C = a + bY, 'a' is autonomous consumption, consumption independent of income.

This question belongs to: Economy GK Economy Set 1

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Question #1

The 'shoe-leather cost' of inflation refers to:

A. cost of holding less cash and making more frequent trips to banks

B. cost of buying shoes

C. cost of unemployment

D. cost of imports

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Correct Answer: Option A

Explanation:
Shoe-leather cost is the cost associated with reducing money holdings to avoid inflation.

This question belongs to: Economy GK Economy Set 1

Question #2

The 'Wholesale Price Index' measures:

A. prices of consumer goods only

B. prices at the wholesale level

C. retail prices

D. prices of services

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Correct Answer: Option B

Explanation:
WPI measures price changes at the wholesale level.

This question belongs to: Economy GK Economy Set 1

Question #3

Which of the following is a feature of the 'Efficient Market Hypothesis' in its semi-strong form?

A. Prices reflect all publicly available information

B. Prices reflect all information including private information

C. Prices do not reflect any information

D. Prices reflect only past price information

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Correct Answer: Option A

Explanation:
The semi-strong form of the efficient market hypothesis asserts that stock prices adjust rapidly to all publicly available information, so that neither technical nor fundamental analysis can yield abnormal returns.

This question belongs to: Economy GK Economy Set 1

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