In the context of elasticity, a perfectly inelastic demand curve is: MCQ with Answer and Explanation

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In the context of elasticity, a perfectly inelastic demand curve is:

A. Horizontal

B. Upward sloping

C. Downward sloping with unit elasticity

D. Vertical

Answer: Option D

Solution (By JKSSB Mock Tests)

A perfectly inelastic demand curve is a vertical straight line, indicating that quantity demanded does not change at all with changes in price.

This question belongs to: Economy GK Economy Set 1

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Question #1

The concept of 'Multiplier' in Keynesian economics is related to:

A. Change in money supply and change in prices

B. Change in interest rate and change in investment

C. Change in tax rate and change in revenue

D. Change in investment and change in income

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Correct Answer: Option D

Explanation:
The investment multiplier shows how much income increases as a result of an initial increase in investment. Multiplier = 1/(1-MPC).

This question belongs to: Economy GK Economy Set 1

Question #2

Which of the following is a characteristic of the 'Overlapping Generations' model?

A. Only static optimisation is considered

B. Agents live for only one period

C. Agents live for multiple periods and different generations coexist

D. There is a single infinitely-lived representative agent

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Correct Answer: Option C

Explanation:
In overlapping-generations models, individuals live for a finite number of periods and at any date several generations coexist, allowing analysis of intergenerational issues and dynamic inefficiency.

This question belongs to: Economy GK Economy Set 1

Question #3

The 'Goods and Services Tax' on cheese is:

A. 18%

B. 12%

C. 28%

D. 5%

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Correct Answer: Option B

Explanation:
Cheese attracts 12% GST.

This question belongs to: Economy GK Economy Set 1

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