The concept of 'Fiscal Multiplier' measures: MCQ with Answer and Explanation

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The concept of 'Fiscal Multiplier' measures:

A. Only the change in interest rates

B. Only the change in the exchange rate

C. The change in output resulting from a unit change in government spending or taxes

D. Only the change in the money supply

Answer: Option C

Solution (By JKSSB Mock Tests)

The fiscal multiplier is the ratio of the change in real GDP to an exogenous change in the fiscal instrument (government purchases or taxes).

This question belongs to: Economy GK Economy Set 1

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Question #1

The 'Wholesale Price Index' is used in India for:

A. pension calculation

B. measurement of inflation at wholesale level

C. income tax

D. wage revision

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Correct Answer: Option B

Explanation:
WPI measures inflation at the wholesale level.

This question belongs to: Economy GK Economy Set 1

Question #2

The 'Goods and Services Tax' on passenger transport by air-conditioned buses is:

A. 12%

B. 18%

C. 0%

D. 5%

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Correct Answer: Option D

Explanation:
AC bus passenger transport attracts 5% GST.

This question belongs to: Economy GK Economy Set 1

Question #3

Which of the following is not included in the calculation of Gross Domestic Product at market prices?

A. Final consumption expenditure of households

B. Government final consumption expenditure

C. Old age pension paid by government

D. Gross fixed capital formation

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Correct Answer: Option C

Explanation:
Old age pension is a transfer payment and is not a payment for current production, hence it is excluded from GDP.

This question belongs to: Economy GK Economy Set 1

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