The concept of 'Liquidity Trap' was introduced by: MCQ with Answer and Explanation

The concept of 'Liquidity Trap' was introduced by:
A. David Ricardo
B. Adam Smith
C. Milton Friedman
D. John Maynard Keynes
Answer: Option D
Solution (By JKSSB Mock Tests)
Keynes introduced the concept of liquidity trap, a situation where interest rates are so low that people prefer to hold cash rather than invest in bonds, making monetary policy ineffective.

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Practice More Economy Set 1 Questions

Question #1
The 'Foreign Direct Investment' policy in India is formulated by:
A. SEBI
B. NITI Aayog
C. RBI
D. Department for Promotion of Industry and Internal Trade

Correct Answer: Option D


Explanation:
FDI policy is formulated by the Department for Promotion of Industry and Internal Trade.

This question belongs to: Economy GK Economy Set 1
Question #2
Which of the following is a feature of the '15-Minute City' concept?
A. An urban planning model in which most daily needs can be met within a short walk or cycle from home
B. A purely residential suburb without services
C. A city in which all travel requires long car journeys
D. Only a high-speed transport network without local amenities

Correct Answer: Option A


Explanation:
The 15-minute city is an urban design principle that aims to ensure that residents can access work, shopping, education, healthcare and leisure within a 15-minute walk or bicycle ride from their homes.

This question belongs to: Economy GK Economy Set 1
Question #3
Under a floating exchange rate system, a fall in the external value of a currency due to market forces is called:
A. revaluation
B. appreciation
C. devaluation
D. depreciation

Correct Answer: Option D


Explanation:
A market-driven fall in the external value of a currency is called depreciation.

This question belongs to: Economy GK Economy Set 1