The 'Consumer Price Index' measures: MCQ with Answer and Explanation

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The 'Consumer Price Index' measures:

A. wholesale prices

B. retail prices paid by consumers

C. prices of exports

D. prices of imports

Answer: Option B

Solution (By JKSSB Mock Tests)

CPI measures changes in retail prices paid by consumers.

This question belongs to: Economy GK Economy Set 1

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Practice More Economy Set 1 Questions

Question #1

The term 'Fiscal Drag' refers to:

A. Automatic increase in tax revenue due to inflation

B. Deliberate reduction in government spending

C. Increase in fiscal deficit

D. Decrease in tax rates

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Correct Answer: Option A

Explanation:
Fiscal drag occurs when inflation pushes taxpayers into higher tax brackets, increasing tax revenue without any change in tax rates, acting as an automatic stabiliser.

This question belongs to: Economy GK Economy Set 1

Question #2

The 'Giffen paradox' occurs when:

A. the good is a luxury

B. the good has many substitutes

C. the income effect of a price rise dominates the substitution effect for an inferior good

D. the substitution effect dominates the income effect

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Correct Answer: Option C

Explanation:
Giffen goods have a strong negative income effect that outweighs the substitution effect, causing demand to rise with price.

This question belongs to: Economy GK Economy Set 1

Question #3

In the circular flow of income, injections include:

A. investment, government expenditure and exports

B. wages and rent

C. consumption and saving

D. saving, taxes and imports

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Correct Answer: Option A

Explanation:
Injections into the circular flow are investment, government expenditure and exports.

This question belongs to: Economy GK Economy Set 1

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