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. Downward sloping with unit elasticity

B. Vertical

C. Upward sloping

D. Horizontal

Answer: Option B

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

Which of the following is most likely to cause a current account deficit to widen?

A. Increase in exports

B. Fall in imports

C. Increase in remittances

D. Rise in crude oil prices

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Correct Answer: Option D

Explanation:
Rising crude oil prices increase the import bill, widening the current account deficit.

This question belongs to: Economy GK Economy Set 1

Question #2

The 'adaptive expectations' hypothesis assumes people form expectations based on:

A. past values of the variable

B. random guesses

C. rational models only

D. future policy announcements only

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Correct Answer: Option A

Explanation:
Adaptive expectations are formed based on past observations.

This question belongs to: Economy GK Economy Set 1

Question #3

Which of the following is a feature of the Indian monetary policy framework since 2016?

A. Exchange rate targeting

B. Multiple indicator approach without a nominal anchor

C. Monetary targeting with M3 as the sole intermediate target

D. Flexible inflation targeting with CPI as the nominal anchor

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Correct Answer: Option D

Explanation:
India adopted a Flexible Inflation Targeting framework in 2016, with CPI inflation as the nominal anchor and a target of 4% with a tolerance band of ±2%.

This question belongs to: Economy GK Economy Set 1

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