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 real wealth and consumption

B. increase unemployment

C. reduce real wealth

D. reduce money supply

Answer: Option A

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

The concept of 'Invisible Hand' was introduced by:

A. Karl Marx

B. Alfred Marshall

C. Adam Smith

D. John Maynard Keynes

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Correct Answer: Option C

Explanation:
Adam Smith in 'The Wealth of Nations' introduced the concept of the invisible hand, suggesting that individuals pursuing their self-interest unintentionally promote the social good.

This question belongs to: Economy GK Economy Set 1

Question #2

The 'GST compensation cess' was originally applicable for how many years from 2017?

A. 10 years

B. 5 years

C. 2 years

D. 15 years

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Correct Answer: Option B

Explanation:
GST compensation cess was initially applicable for five years from 2017 to 2022, later extended.

This question belongs to: Economy GK Economy Set 1

Question #3

The 'Foreign Direct Investment' limit in defence sector was increased to what percentage through the automatic route?

A. 26%

B. 100%

C. 74%

D. 49%

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Correct Answer: Option C

Explanation:
FDI in defence under automatic route is allowed up to 74%, with higher under government route.

This question belongs to: Economy GK Economy Set 1

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