Which of the following is a characteristic of the 'New Classical' policy ineffectiveness proposition? MCQ with Answer and Explanation

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

A. Anticipated monetary policy systematically affects real output

B. Monetary policy is always effective

C. Fiscal policy is always effective

D. Only unanticipated monetary policy can affect real output

Answer: Option D

Solution (By JKSSB Mock Tests)

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

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Question #1

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The 'Most Favoured Nation' tariff treatment under WTO requires countries to:

A. extend the same trade advantages to all WTO members

B. give special preferences to neighbours

C. ban imports

D. impose zero tariffs on all goods

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Correct Answer: Option A

Explanation:
MFN requires non-discriminatory treatment among all WTO members.

This question belongs to: Economy GK Economy Set 1

Question #2

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The concept of 'Horizontal Equity' in taxation requires that:

A. Individuals with higher ability to pay should pay proportionally more

B. Only vertical equity matters

C. Individuals with the same ability to pay should pay the same tax

D. Taxes should be independent of ability to pay

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Correct Answer: Option C

Explanation:
Horizontal equity is the principle that taxpayers with equal capacity to pay (usually measured by income or wealth) should bear equal tax burdens.

This question belongs to: Economy GK Economy Set 1