The 'financial trilemma' states that a country cannot simultaneously have: MCQ with Answer and Explanation

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The 'financial trilemma' states that a country cannot simultaneously have:

A. free trade, high tariffs and high exports

B. low taxes, high spending and low deficit

C. high growth, low inflation and low unemployment

D. free capital mobility, fixed exchange rates and independent monetary policy

Answer: Option D

Solution (By JKSSB Mock Tests)

The trilemma says a country can achieve only two of three: free capital mobility, fixed exchange rate and independent monetary policy.

This question belongs to: Economy GK Economy Set 1

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Question #1

The 'World Trade Organization' has how many members?

A. about 120

B. 200

C. 164

D. 190

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Correct Answer: Option C

Explanation:
The WTO has 164 members.

This question belongs to: Economy GK Economy Set 1

Question #2

The term 'Non-Performing Asset' in Indian banking is defined as a loan where:

A. Interest or principal is overdue for more than 90 days

B. The borrower has excess collateral

C. Interest is paid regularly

D. The asset generates continuous income

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Correct Answer: Option A

Explanation:
As per RBI guidelines, a term loan is classified as NPA if interest or instalment of principal remains overdue for a period of more than 90 days.

This question belongs to: Economy GK Economy Set 1

Question #3

Which of the following is a characteristic of the 'Catch-up' or 'Convergence' hypothesis in growth theory?

A. Only absolute convergence always holds unconditionally

B. There is no tendency for convergence

C. Poorer economies tend to grow faster than richer ones, conditional on similar steady-state determinants

D. Richer economies always grow faster

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Correct Answer: Option C

Explanation:
Conditional convergence predicts that countries with lower initial income per worker grow faster once differences in saving rates, population growth and technology are controlled for.

This question belongs to: Economy GK Economy Set 1

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