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. marginal propensity to consume

B. investment

C. saving

D. autonomous consumption

Answer: Option D

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 'Pigou effect' suggests that falling prices:

A. increase unemployment

B. increase real wealth and consumption

C. reduce real wealth

D. reduce money supply

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Correct Answer: Option B

Explanation:
The Pigou effect states that lower prices raise real wealth and stimulate consumption.

This question belongs to: Economy GK Economy Set 1

Question #2

The SARFAESI Act, 2002 primarily deals with:

A. bank nationalization

B. payment systems

C. microfinance regulation

D. recovery of non-performing assets and securitization

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Correct Answer: Option D

Explanation:
SARFAESI Act enables banks and financial institutions to recover non-performing assets.

This question belongs to: Economy GK Economy Set 1

Question #3

In the context of measuring inequality, the 'Palma Ratio' is defined as:

A. The ratio of the top 1 per cent to the bottom 1 per cent

B. The ratio of the income share of the top 10 per cent to that of the bottom 40 per cent

C. The share of the middle 50 per cent only

D. The Gini coefficient multiplied by 100

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Correct Answer: Option B

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

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