The 'menu cost' of inflation refers to: MCQ with Answer and Explanation

The 'menu cost' of inflation refers to:
A. cost to firms of changing prices frequently
B. cost of food
C. cost of printing new currency
D. cost of borrowing
Answer: Option A
Solution (By JKSSB Mock Tests)
Menu cost is the cost firms incur in updating prices during inflation.

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Practice More Economy Set 1 Questions

Question #1
Which of the following is a characteristic of the 'Endogenous Money' view?
A. The money supply is strictly controlled by the central bank through the monetary base
B. Banks play no role in money creation
C. The money supply is determined primarily by the demand for bank credit and accommodates itself to that demand
D. Only the monetary base matters

Correct Answer: Option C


Explanation:
The endogenous-money approach argues that the quantity of money is determined by the demand for loans and the willingness of banks to extend credit, with the central bank mainly setting the price of reserves rather than the quantity of base money.

This question belongs to: Economy GK Economy Set 1
Question #2
The concept of 'Economic Rent' in classical economics refers to:
A. Profit of the entrepreneur
B. Wages of labour
C. Payment for the use of land arising from its scarcity
D. Payment for the use of capital only

Correct Answer: Option C


Explanation:
In classical economics, economic rent is the payment made for the use of land (or other resources in fixed supply) that arises due to its scarcity and differential fertility.

This question belongs to: Economy GK Economy Set 1
Question #3
The 'Insolvency and Bankruptcy Board of India' regulates:
A. insolvency professionals and agencies
B. banks only
C. insurance companies
D. stock exchanges

Correct Answer: Option A


Explanation:
IBBI regulates insolvency professionals, agencies and information utilities.

This question belongs to: Economy GK Economy Set 1