The 'Giffen paradox' occurs when: MCQ with Answer and Explanation

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The 'Giffen paradox' occurs when:

A. the good is a luxury

B. the good has many substitutes

C. the substitution effect dominates the income effect

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

Answer: Option D

Solution (By JKSSB Mock Tests)

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

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Question #1

The 'Goods and Services Tax' on carbonated water is:

A. 18%

B. 5%

C. 12%

D. 28% plus cess

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Correct Answer: Option D

Explanation:
Carbonated water and aerated drinks attract 28% GST plus cess.

This question belongs to: Economy GK Economy Set 1

Question #2

The 'Dutch disease' term was coined after the discovery of natural gas in:

A. Australia

B. Netherlands

C. Norway

D. United Kingdom

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Correct Answer: Option B

Explanation:
Dutch disease was named after the effects of natural gas discoveries in the Netherlands.

This question belongs to: Economy GK Economy Set 1

Question #3

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

A. 28%

B. 5%

C. 12%

D. 18%

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Correct Answer: Option D

Explanation:
Helicopter services attract 18% GST, with some exemptions for pilgrimage.

This question belongs to: Economy GK Economy Set 1

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