The 'Pigou effect' suggests that falling prices: MCQ with Answer and Explanation

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The 'Pigou effect' suggests that falling prices:

A. increase unemployment

B. reduce real wealth

C. reduce money supply

D. increase real wealth and consumption

Answer: Option D

Solution (By JKSSB Mock Tests)

The Pigou effect states that lower prices raise real wealth and stimulate consumption.

This question belongs to: Economy GK Economy Set 1

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Question #1

In the context of monetary economics, the 'Velocity of Circulation of Money' refers to:

A. The rate of interest

B. The rate of inflation only

C. The growth rate of the money supply

D. The average number of times a unit of money is used to purchase final goods and services in a given period

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Correct Answer: Option D

Explanation:
Velocity of money measures how frequently the average unit of currency is spent on final goods and services during a given time period; it appears in the equation of exchange.

This question belongs to: Economy GK Economy Set 1

Question #2

The 'Central Goods and Services Tax Act' was passed in which year?

A. 2016

B. 2017

C. 2015

D. 2018

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Correct Answer: Option B

Explanation:
CGST Act was passed in 2017.

This question belongs to: Economy GK Economy Set 1

Question #3

The 'PM-KISAN' income support is transferred in how many equal instalments per year?

A. 3

B. 6

C. 4

D. 2

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Correct Answer: Option A

Explanation:
PM-KISAN provides Rs 6,000 in three equal instalments of Rs 2,000 each.

This question belongs to: Economy GK Economy Set 1

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