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

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Inflation-indexed bonds provide investors protection against:

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

B. income tax

C. exchange rate fluctuations

D. market risk

Answer: Option A

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

Which of the following is a characteristic of the 'Adaptive Expectations' hypothesis?

A. Expectations are always correct

B. Agents form expectations solely on the basis of past values of the variable

C. Only future information matters

D. Agents use all available information efficiently

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Correct Answer: Option B

Explanation:
Under adaptive expectations, agents revise their expectations gradually on the basis of past forecast errors, so that expectations are a weighted average of past observations.

This question belongs to: Economy GK Economy Set 1

Question #2

Which of the following is an automatic stabiliser in the fiscal system?

A. One-time stimulus package

B. Progressive income tax structure

C. Change in repo rate by the central bank

D. Discretionary increase in infrastructure spending

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Correct Answer: Option B

Explanation:
Progressive income taxes automatically increase the tax burden during expansions and reduce it during contractions, stabilising disposable income without new legislation.

This question belongs to: Economy GK Economy Set 1

Question #3

Capital account convertibility means:

A. fixed exchange rate

B. abolition of all capital controls

C. free conversion of the rupee for current account transactions only

D. free conversion of the rupee into foreign currency for capital account transactions

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Correct Answer: Option D

Explanation:
Capital account convertibility allows free conversion of the rupee for capital account transactions.

This question belongs to: Economy GK Economy Set 1

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