The 'circular flow of income' in a two-sector economy includes: MCQ with Answer and Explanation

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The 'circular flow of income' in a two-sector economy includes:

A. only firms

B. households and firms

C. only households

D. government and foreign sector

Answer: Option B

Solution (By JKSSB Mock Tests)

A two-sector economy includes households and firms.

This question belongs to: Economy GK Economy Set 1

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Question #1

In the context of market failure, 'Asymmetric Information' leads to:

A. Zero transaction costs

B. Adverse selection and moral hazard

C. Efficient market outcomes

D. Perfect competition

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Correct Answer: Option B

Explanation:
Asymmetric information, where one party has more information than the other, can lead to adverse selection (before the contract) and moral hazard (after the contract).

This question belongs to: Economy GK Economy Set 1

Question #2

The 'Tea Board of India' is headquartered in:

A. Delhi

B. Kolkata

C. Chennai

D. Mumbai

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Correct Answer: Option B

Explanation:
The Tea Board of India is headquartered in Kolkata.

This question belongs to: Economy GK Economy Set 1

Question #3

The 'GST compensation cess' is levied on which goods?

A. luxury and sin goods

B. all goods

C. agricultural produce only

D. essential food items

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Correct Answer: Option A

Explanation:
GST compensation cess is levied on luxury and sin goods.

This question belongs to: Economy GK Economy Set 1

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