The 'Taylor rule' is used by central banks to set: MCQ with Answer and Explanation

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The 'Taylor rule' is used by central banks to set:

A. reserve requirements

B. foreign exchange reserves

C. exchange rates

D. policy interest rates based on inflation and output gap

Answer: Option D

Solution (By JKSSB Mock Tests)

The Taylor rule prescribes setting policy interest rates based on inflation and output gap.

This question belongs to: Economy GK Economy Set 1

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Question #1

Which of the following is a characteristic of the 'New Classical' policy ineffectiveness proposition?

A. Only unanticipated monetary policy can affect real output

B. Monetary policy is always effective

C. Fiscal policy is always effective

D. Anticipated monetary policy systematically affects real output

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Correct Answer: Option A

Explanation:
Under rational expectations and continuous market clearing, only unanticipated policy shocks can affect real variables; anticipated policy is neutral.

This question belongs to: Economy GK Economy Set 1

Question #2

The 'Goods and Services Tax' on ambulance services is:

A. 5%

B. 18%

C. 0%

D. exempt

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Correct Answer: Option D

Explanation:
Ambulance services are exempt from GST.

This question belongs to: Economy GK Economy Set 1

Question #3

The 'Child and Adolescent Labour (Prohibition and Regulation) Act' was amended in which year?

A. 2010

B. 2018

C. 2016

D. 2020

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Correct Answer: Option C

Explanation:
The Child Labour Act was amended in 2016.

This question belongs to: Economy GK Economy Set 1

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