The 'Fisher equation' is expressed as: MCQ with Answer and Explanation

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The 'Fisher equation' is expressed as:

A. MV = PT

B. Y = C + I + G

C. i = r + π

D. S = I

Answer: Option C

Solution (By JKSSB Mock Tests)

The Fisher equation is i = r + π, where i is nominal interest rate, r is real interest rate and π is inflation.

This question belongs to: Economy GK Economy Set 1

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Question #1

Which of the following is NOT a type of inflation based on speed?

A. Creeping inflation

B. Demand-pull inflation

C. Walking inflation

D. Galloping inflation

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Correct Answer: Option B

Explanation:
Demand-pull inflation is a classification based on cause. Based on speed/intensity, inflation is classified as creeping, walking, running and galloping (or hyperinflation).

This question belongs to: Economy GK Economy Set 1

Question #2

The concept of 'Liquidity Preference' theory explains the determination of:

A. Rate of interest

B. Real wages

C. Profit rate

D. Rent on land

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Correct Answer: Option A

Explanation:
According to Keynes, the rate of interest is determined by the demand for money (liquidity preference) and the supply of money.

This question belongs to: Economy GK Economy Set 1

Question #3

The 'Goods and Services Tax' on petroleum products is:

A. 5%

B. 18%

C. not levied currently

D. 12%

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Correct Answer: Option C

Explanation:
Petroleum crude, petrol, diesel, natural gas and ATF are currently outside GST.

This question belongs to: Economy GK Economy Set 1

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