The 'original sin' problem in international finance refers to: MCQ with Answer and Explanation

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The 'original sin' problem in international finance refers to:

A. currency depreciation

B. high domestic debt

C. inability of emerging economies to borrow abroad in their own currency

D. trade deficits

Answer: Option C

Solution (By JKSSB Mock Tests)

Original sin is the inability of emerging economies to borrow abroad in their own domestic currency.

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

B. Income has no relation to happiness at any level

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

Which of the following is NOT a type of cost in the short run?

A. Sunk cost as the only long-run cost

B. Variable cost

C. Total cost

D. Fixed cost

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Correct Answer: Option A

Explanation:
In the short run, costs are classified as fixed, variable and total. Sunk costs are costs that have already been incurred and cannot be recovered, relevant in both short and long run decisions.

This question belongs to: Economy GK Economy Set 1

Question #3

The 'World Health Organization' is headquartered in:

A. Geneva

B. New York

C. Paris

D. Rome

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Correct Answer: Option A

Explanation:
The World Health Organization is headquartered in Geneva.

This question belongs to: Economy GK Economy Set 1

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