The 'Ricardo equivalence' proposition states that: MCQ with Answer and Explanation

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The 'Ricardo equivalence' proposition states that:

A. government borrowing is always expansionary

B. government spending is always contractionary

C. taxes have no effect

D. deficit-financed spending does not affect aggregate demand if households anticipate future taxes

Answer: Option D

Solution (By JKSSB Mock Tests)

Ricardian equivalence argues that public borrowing is offset by higher private saving in anticipation of future taxes.

This question belongs to: Economy GK Economy Set 1

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Question #1

Which of the following is a characteristic of the 'Global Value Chains' phenomenon?

A. Trade is limited to primary commodities

B. Only final goods are traded

C. Production processes are fragmented across countries, with intermediate goods crossing borders multiple times

D. All production occurs within a single country

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Correct Answer: Option C

Explanation:
Global value chains describe the international fragmentation of production in which different stages of the production process are located in different countries and intermediate inputs are traded intensively.

This question belongs to: Economy GK Economy Set 1

Question #2

The term 'Structural Unemployment' arises due to:

A. Temporary mismatch between jobs and workers

B. Seasonal variations in demand

C. Changes in the structure of the economy

D. Cyclical fluctuations in economic activity

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Correct Answer: Option C

Explanation:
Structural unemployment occurs due to changes in the structure of the economy, such as technological changes or decline of certain industries, creating a mismatch between skills of workers and available jobs.

This question belongs to: Economy GK Economy Set 1

Question #3

The 'Constitution (101st Amendment) Act, 2016' inserted which article for GST?

A. Article 324

B. Article 280

C. Article 246A

D. Article 356

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Correct Answer: Option C

Explanation:
Article 246A was inserted by the 101st Amendment for GST.

This question belongs to: Economy GK Economy Set 1

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