The Laffer curve shows the relationship between: MCQ with Answer and Explanation

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The Laffer curve shows the relationship between:

A. income and consumption

B. tax rate and tax revenue

C. inflation and unemployment

D. interest rate and investment

Answer: Option B

Solution (By JKSSB Mock Tests)

The Laffer curve shows the relationship between tax rates and total tax revenue.

This question belongs to: Economy GK Economy Set 1

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Question #1

The term 'Crowding Out' in economics refers to:

A. Increase in private investment due to government spending

B. Decrease in private investment due to government borrowing

C. Decrease in imports due to tariffs

D. Increase in exports due to currency depreciation

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Correct Answer: Option B

Explanation:
Crowding out occurs when increased government borrowing leads to higher interest rates, which reduces private sector investment.

This question belongs to: Economy GK Economy Set 1

Question #2

The 'Goods and Services Tax' on penal interest on loans is:

A. 12%

B. 0%

C. exempt

D. 18%

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Correct Answer: Option C

Explanation:
Penal interest on loans is exempt from GST.

This question belongs to: Economy GK Economy Set 1

Question #3

The 'rational expectations' hypothesis assumes people:

A. ignore information

B. only use past values

C. have no expectations

D. use all available information to form expectations

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Correct Answer: Option D

Explanation:
Rational expectations assumes agents use all available information efficiently.

This question belongs to: Economy GK Economy Set 1

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