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. low taxes, high spending and low deficit

B. free trade, high tariffs and high exports

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

D. high growth, low inflation and low unemployment

Answer: Option C

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 concept of indicative planning in India refers to:

A. planning without any state intervention

B. state ownership of all means of production

C. planning in a mixed economy with public and private sectors

D. planning based on forced targets

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Correct Answer: Option C

Explanation:
Indicative planning in India is planning in a mixed economy with both public and private sectors.

This question belongs to: Economy GK Economy Set 1

Question #2

The 'Goods and Services Tax' on internet services is:

A. 5%

B. 12%

C. 28%

D. 18%

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Correct Answer: Option D

Explanation:
Internet services attract 18% GST.

This question belongs to: Economy GK Economy Set 1

Question #3

Which of the following is a feature of the 'Wealth Inequality' literature associated with Piketty?

A. Wealth inequality always declines with development

B. When the rate of return on capital exceeds the growth rate of the economy, wealth inequality tends to rise

C. Capital accumulation always reduces inequality

D. Only labour income inequality matters

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Correct Answer: Option B

Explanation:
Piketty’s central argument is that when the rate of return on capital (r) systematically exceeds the growth rate of the economy (g), the share of capital in national income and the concentration of wealth tend to increase.

This question belongs to: Economy GK Economy Set 1

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