The term 'Crowding Out' in economics refers to: MCQ with Answer and Explanation

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The term 'Crowding Out' in economics refers to:

A. Decrease in private investment due to government borrowing

B. Increase in private investment due to government spending

C. Decrease in imports due to tariffs

D. Increase in exports due to currency depreciation

Answer: Option A

Solution (By JKSSB Mock Tests)

Crowding out occurs when increased government borrowing leads to higher interest rates, which reduces private sector investment.

This question belongs to: Economy GK Economy Set 1

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Question #1

The concept of 'Bounded Rationality' associated with Herbert Simon implies that:

A. Individuals always optimise with unlimited computational power

B. Individuals are limited in their cognitive capacity and information and therefore satisfice rather than optimise

C. Rationality is unbounded

D. Only perfect information is assumed

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Correct Answer: Option B

Explanation:
Bounded rationality recognises that human decision-makers face cognitive limitations and incomplete information, so they typically seek satisfactory rather than optimal solutions.

This question belongs to: Economy GK Economy Set 1

Question #2

The 'Amul brand' is owned by:

A. NDDB

B. Nestle

C. Gujarat Cooperative Milk Marketing Federation

D. Mother Dairy

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Correct Answer: Option C

Explanation:
Amul is owned by the Gujarat Cooperative Milk Marketing Federation.

This question belongs to: Economy GK Economy Set 1

Question #3

The 'systemically important financial institution' is one whose failure could:

A. have no effect on the economy

B. trigger a systemic crisis

C. reduce inflation

D. benefit other banks

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Correct Answer: Option B

Explanation:
A systemically important institution is too big or interconnected to fail without causing systemic risk.

This question belongs to: Economy GK Economy Set 1

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