The 'base effect' in inflation refers to: MCQ with Answer and Explanation

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The 'base effect' in inflation refers to:

A. inflation measured against a low or high price level in the previous year

B. the effect of changing the base year of GDP

C. the effect of exchange rate on imports

D. the effect of money supply on prices

Answer: Option A

Solution (By JKSSB Mock Tests)

Base effect refers to the influence 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 'UNCTAD' headquarters is in:

A. Paris

B. Vienna

C. New York

D. Geneva

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Correct Answer: Option D

Explanation:
UNCTAD headquarters is in Geneva.

This question belongs to: Economy GK Economy Set 1

Question #2

The concept of 'Data as a Factor of Production' suggests that:

A. Data is only a consumption good

B. Only traditional factors matter

C. Data has become a key input in production processes alongside labour, capital and land

D. Data has no productive value

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Correct Answer: Option C

Explanation:
In the digital economy, data is increasingly recognised as a critical factor of production that enables personalisation, prediction, optimisation and the creation of new products and services.

This question belongs to: Economy GK Economy Set 1

Question #3

In the context of demand theory, the law of demand may not hold for:

A. All inferior goods without exception

B. Normal goods

C. Giffen goods and Veblen goods

D. Necessary goods with elastic demand

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Correct Answer: Option C

Explanation:
Giffen goods (strong negative income effect) and Veblen goods (prestige value rising with price) are exceptions to the law of demand.

This question belongs to: Economy GK Economy Set 1

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