The 'base effect' in inflation calculation means: MCQ with Answer and Explanation

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The 'base effect' in inflation calculation means:

A. effect of money supply

B. the influence of the previous year's price level on current inflation

C. change in base year of the price index

D. effect of currency depreciation

Answer: Option B

Solution (By JKSSB Mock Tests)

Base effect refers to the impact of the previous year's price level on the current inflation rate.

This question belongs to: Economy GK Economy Set 1

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Question #1

The 'Multilateral Investment Guarantee Agency' provides:

A. trade finance

B. currency exchange

C. export subsidies

D. political risk insurance and credit enhancement for foreign investment

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Correct Answer: Option D

Explanation:
MIGA provides political risk insurance to promote foreign direct investment.

This question belongs to: Economy GK Economy Set 1

Question #2

The LM curve shows combinations of income and interest rate where:

A. labour market is in equilibrium

B. balance of payments is in equilibrium

C. money market is in equilibrium

D. goods market is in equilibrium

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Correct Answer: Option C

Explanation:
The LM curve represents equilibrium in the money market.

This question belongs to: Economy GK Economy Set 1

Question #3

The 'Tobin tax' is a proposed tax on:

A. property

B. imports

C. short-term foreign exchange transactions

D. income

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Correct Answer: Option C

Explanation:
A Tobin tax is a tax on short-term foreign exchange transactions to reduce speculative flows.

This question belongs to: Economy GK Economy Set 1

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