The immediate cause of the 1991 economic crisis in India was: MCQ with Answer and Explanation

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The immediate cause of the 1991 economic crisis in India was:

A. a severe drought

B. a balance of payments crisis

C. fall in agricultural production

D. industrial stagnation

Answer: Option B

Solution (By JKSSB Mock Tests)

The 1991 economic crisis was triggered by a severe balance of payments crisis.

This question belongs to: Economy GK Economy Set 1

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Question #1

Which of the following is a characteristic of the 'Easterlin Paradox'?

A. Income has no relation to happiness at any level

B. Only relative income matters and absolute income is irrelevant even within countries

C. Happiness always rises proportionally with income both within and across countries

D. Within countries, higher income is associated with higher happiness, but over time average happiness does not rise with average income

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Correct Answer: Option D

Explanation:
The Easterlin Paradox observes that, while richer individuals within a country tend to report higher happiness, average national happiness does not increase systematically as national income grows over the long run.

This question belongs to: Economy GK Economy Set 1

Question #2

The 'Consumer Price Index - Industrial Workers' is compiled by:

A. CSO

B. NITI Aayog

C. Labour Bureau

D. RBI

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Correct Answer: Option C

Explanation:
CPI-IW is compiled by the Labour Bureau.

This question belongs to: Economy GK Economy Set 1

Question #3

The concept of 'Effective Demand' in Keynesian economics determines:

A. Only the price level

B. Only the interest rate

C. The level of employment and output

D. Only the money supply

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Correct Answer: Option C

Explanation:
According to Keynes, the level of effective demand (where aggregate demand equals aggregate supply) determines the equilibrium level of employment and output.

This question belongs to: Economy GK Economy Set 1

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