Which of the following is a characteristic of the short-run production function? MCQ with Answer and Explanation

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Which of the following is a characteristic of the short-run production function?

A. At least one factor is fixed

B. All factors are variable

C. No diminishing returns possible

D. Returns to scale are the only relevant concept

Answer: Option A

Solution (By JKSSB Mock Tests)

In the short run, at least one factor of production is fixed, and the law of variable proportions operates.

This question belongs to: Economy GK Economy Set 1

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Question #1

The concept of 'Fiscal Dominance' refers to:

A. Only the dominance of monetary policy

B. A situation in which fiscal policy constraints force the monetary authority to monetise deficits

C. The absence of any deficit

D. Complete independence of the central bank

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Correct Answer: Option B

Explanation:
Fiscal dominance occurs when the fiscal authority’s need to finance deficits constrains or dictates the behaviour of the monetary authority, often leading to inflationary monetisation.

This question belongs to: Economy GK Economy Set 1

Question #2

The term 'Disguised Unemployment' implies that:

A. More people are engaged in a task than required, with marginal productivity close to zero

B. Workers are employed in high-productivity jobs

C. Workers are unemployed and actively seeking jobs

D. Unemployment is due to seasonal factors only

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Correct Answer: Option A

Explanation:
Disguised unemployment exists when the removal of some workers does not reduce total output, typically found in agriculture in developing countries.

This question belongs to: Economy GK Economy Set 1

Question #3

Which of the following is NOT a function of the stock exchange?

A. Issuing new currency notes

B. Mobilising savings for investment

C. Price discovery of securities

D. Providing liquidity to securities

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Correct Answer: Option A

Explanation:
Issuing currency notes is the function of the central bank. Stock exchanges provide liquidity, facilitate price discovery and help mobilise savings for productive investment.

This question belongs to: Economy GK Economy Set 1

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