The paradox of thrift suggests that: MCQ with Answer and Explanation

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The paradox of thrift suggests that:

A. saving is always beneficial for the economy

B. saving is impossible in a recession

C. thrift always increases investment

D. increased saving by all households may reduce aggregate demand and output

Answer: Option D

Solution (By JKSSB Mock Tests)

The paradox of thrift states that if everyone saves more during a recession, total demand and output may fall.

This question belongs to: Economy GK Economy Set 1

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Question #1

The 'Fisher effect' states that nominal interest rates:

A. equal real interest rate minus inflation

B. adjust one-for-one with expected inflation

C. are always zero

D. equal real interest rate divided by inflation

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Correct Answer: Option B

Explanation:
The Fisher effect states that nominal interest rates rise with expected inflation.

This question belongs to: Economy GK Economy Set 1

Question #2

In the context of digital finance, 'Central Bank Digital Currency' (CBDC) refers to:

A. A digital form of central-bank money that is a direct liability of the central bank

B. Only privately issued cryptocurrencies

C. Only physical cash

D. Only commercial-bank deposits

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Correct Answer: Option A

Explanation:
A central-bank digital currency is a digital payment instrument denominated in the national unit of account that is a direct liability of the central bank, distinct from both physical cash and commercial-bank deposits.

This question belongs to: Economy GK Economy Set 1

Question #3

The Bharatmala Pariyojana is related to:

A. airport modernization

B. expansion of railways

C. development of ports

D. development of national highways and roads

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Correct Answer: Option D

Explanation:
Bharatmala Pariyojana is a national highways and road development programme.

This question belongs to: Economy GK Economy Set 1

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