The 'demonstration effect' in consumption means: MCQ with Answer and Explanation

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The 'demonstration effect' in consumption means:

A. people consume only basic goods

B. people copy the consumption patterns of others

C. people save more

D. people reduce consumption

Answer: Option B

Solution (By JKSSB Mock Tests)

The demonstration effect is the tendency to imitate the consumption patterns of others.

This question belongs to: Economy GK Economy Set 1

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Practice More Economy Set 1 Questions

Question #1

The 'Reserve Bank of India' was established on:

A. 1 July 1934

B. 1 April 1934

C. 1 January 1935

D. 1 April 1935

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Correct Answer: Option D

Explanation:
The RBI was established on 1 April 1935.

This question belongs to: Economy GK Economy Set 1

Question #2

The Balance of Payments is a systematic record of:

A. only government borrowing

B. only visible trade

C. only foreign direct investment

D. all economic transactions between residents of a country and the rest of the world

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Correct Answer: Option D

Explanation:
The Balance of Payments records all economic transactions between residents and the rest of the world.

This question belongs to: Economy GK Economy Set 1

Question #3

Which of the following is NOT a feature of the Keynesian theory?

A. Possibility of underemployment equilibrium

B. Wage-price flexibility ensuring full employment

C. Emphasis on effective demand

D. Importance of government intervention

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Correct Answer: Option B

Explanation:
Keynes rejected the classical assumption of wage-price flexibility leading to automatic full employment. He argued that underemployment equilibrium is possible.

This question belongs to: Economy GK Economy Set 1

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