In the context of economic theory, the 'Invisible Hand' suggests that: MCQ with Answer and Explanation

In the context of economic theory, the 'Invisible Hand' suggests that:
A. Markets always fail
B. Collective ownership is optimal
C. Government planning is necessary for efficiency
D. Individuals pursuing self-interest can promote social welfare through market mechanism
Answer: Option D
Solution (By JKSSB Mock Tests)
Adam Smith's concept of the invisible hand argues that individuals seeking their own gain in competitive markets unintentionally promote the overall social good.

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Practice More Economy Set 1 Questions

Question #1
Hyperinflation is characterized by:
A. stable prices
B. extremely rapid and out-of-control rise in prices
C. slow price rise
D. falling prices

Correct Answer: Option B


Explanation:
Hyperinflation is extremely rapid and uncontrollable price inflation.

This question belongs to: Economy GK Economy Set 1
Question #2
Which of the following is a characteristic of the Indian service sector?
A. Largest contributor to GDP and significant employment generation in recent decades
B. Low contribution to GDP
C. Absence of IT and ITES services
D. Complete dependence on agriculture

Correct Answer: Option A


Explanation:
The services sector is the largest contributor to India's GDP and has been a major driver of growth, particularly through IT, financial services, trade and tourism.

This question belongs to: Economy GK Economy Set 1
Question #3
Which of the following is a feature of the Indian tax system after the introduction of GST?
A. Only origin-based taxation
B. A unified destination-based tax on goods and services with input tax credit mechanism
C. Complete elimination of all state-level taxes without dual structure
D. Persistence of multiple cascading taxes

Correct Answer: Option B


Explanation:
GST replaced a large number of cascading central and state taxes with a unified destination-based tax that permits seamless input tax credit.

This question belongs to: Economy GK Economy Set 1