Inflation-indexed bonds provide investors protection against: MCQ with Answer and Explanation

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Inflation-indexed bonds provide investors protection against:

A. market risk

B. income tax

C. inflation by linking principal or interest to a price index

D. exchange rate fluctuations

Answer: Option C

Solution (By JKSSB Mock Tests)

Inflation-indexed bonds link principal or interest payments to inflation, protecting investors from inflation.

This question belongs to: Economy GK Economy Set 1

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Practice More Economy Set 1 Questions

Question #1

Deficit financing means:

A. financing government expenditure through borrowing or money creation

B. reducing government expenditure

C. repayment of public debt

D. financing government expenditure through taxation

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Correct Answer: Option A

Explanation:
Deficit financing involves financing a budget deficit through borrowing or creation of money.

This question belongs to: Economy GK Economy Set 1

Question #2

In the context of elasticity, cross elasticity of demand between two complementary goods is:

A. Zero

B. Infinity

C. Positive

D. Negative

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Correct Answer: Option D

Explanation:
For complementary goods (e.g., car and petrol), an increase in the price of one leads to a decrease in demand for the other, so cross elasticity is negative.

This question belongs to: Economy GK Economy Set 1

Question #3

The term 'Quantitative Easing' refers to:

A. Reduction in government expenditure

B. Large-scale purchase of assets by the central bank to inject liquidity

C. Increase in CRR

D. Increase in policy interest rates

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Correct Answer: Option B

Explanation:
Quantitative easing is an unconventional monetary policy tool whereby a central bank purchases large quantities of financial assets to inject liquidity into the economy when interest rates are already near zero.

This question belongs to: Economy GK Economy Set 1

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