Which of the following is a characteristic of the 'Easterlin Paradox'? MCQ with Answer and Explanation

Which of the following is a characteristic of the 'Easterlin Paradox'?
A. Happiness always rises proportionally with income both within and across countries
B. Within countries, higher income is associated with higher happiness, but over time average happiness does not rise with average income
C. Only relative income matters and absolute income is irrelevant even within countries
D. Income has no relation to happiness at any level
Answer: Option B
Solution (By JKSSB Mock Tests)
The Easterlin Paradox observes that, while richer individuals within a country tend to report higher happiness, average national happiness does not increase systematically as national income grows over the long run.

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Practice More Economy Set 1 Questions

Question #1
Which of the following is a feature of the Indian money market?
A. No role for the Reserve Bank of India
B. Presence of call money, treasury bills, commercial paper and certificates of deposit
C. Absence of short-term instruments
D. Dominance of long-term instruments only

Correct Answer: Option B


Explanation:
The Indian money market comprises various short-term instruments including the call/notice money market, treasury bills, commercial paper, certificates of deposit and collateralised instruments.

This question belongs to: Economy GK Economy Set 1
Question #2
The index used to measure the performance of core sector industries in India is:
A. Purchasing Managers' Index
B. Index of Industrial Production
C. Consumer Price Index
D. Wholesale Price Index

Correct Answer: Option B


Explanation:
The Index of Industrial Production measures the performance of core sector industries.

This question belongs to: Economy GK Economy Set 1
Question #3
If MPC is 0.8, the investment multiplier is:
A. 8
B. 0.8
C. 1.25
D. 5

Correct Answer: Option D


Explanation:
Multiplier = 1/(1 - 0.8) = 1/0.2 = 5.

This question belongs to: Economy GK Economy Set 1