The concept of 'Liquidity Preference' theory explains the determination of: MCQ with Answer and Explanation

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The concept of 'Liquidity Preference' theory explains the determination of:

A. Profit rate

B. Rent on land

C. Rate of interest

D. Real wages

Answer: Option C

Solution (By JKSSB Mock Tests)

According to Keynes, the rate of interest is determined by the demand for money (liquidity preference) and the supply of money.

This question belongs to: Economy GK Economy Set 1

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Question #1

The concept of 'Crowding Out' can occur through which of the following channels?

A. Only through increased net exports

B. Higher interest rates reducing private investment and appreciation of the currency reducing net exports

C. Only through lower interest rates

D. Only through increased private consumption

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Correct Answer: Option B

Explanation:
Government borrowing can raise interest rates (financial crowding out) and, in an open economy, appreciate the currency, thereby reducing net exports (international crowding out).

This question belongs to: Economy GK Economy Set 1

Question #2

The National Infrastructure Pipeline originally aimed to invest how much in infrastructure between 2020 and 2025?

A. Rs 25 lakh crore

B. Rs 100 lakh crore

C. Rs 50 lakh crore

D. Rs 200 lakh crore

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Correct Answer: Option B

Explanation:
The National Infrastructure Pipeline aimed at investments of Rs 111 lakh crore (about Rs 100 lakh crore) during 2020-25.

This question belongs to: Economy GK Economy Set 1

Question #3

In the production possibility frontier, a point inside the curve indicates:

A. Unattainable combination

B. Underutilisation of resources

C. Efficient utilisation of resources

D. Technological progress

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Correct Answer: Option B

Explanation:
Any point inside the PPF represents underutilisation or inefficient use of resources. Points on the curve are efficient and points outside are unattainable with current resources.

This question belongs to: Economy GK Economy Set 1

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