Which of the following is a feature of the Classical theory of interest? MCQ with Answer and Explanation

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Which of the following is a feature of the Classical theory of interest?

A. Interest is a monetary phenomenon only

B. Interest is determined by demand and supply of real savings and investment

C. Interest is determined by demand and supply of money

D. Liquidity preference determines interest

Answer: Option B

Solution (By JKSSB Mock Tests)

In classical theory, the rate of interest is a real phenomenon determined by the demand for investment and the supply of savings.

This question belongs to: Economy GK Economy Set 1

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Question #1

A tariff is a:

A. ban on exports

B. quantitative limit on imports

C. subsidy given to exporters

D. tax imposed on imported goods

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Correct Answer: Option D

Explanation:
A tariff is a tax imposed on imported goods.

This question belongs to: Economy GK Economy Set 1

Question #2

The Balance of Payments is a systematic record of:

A. only government borrowing

B. only foreign direct investment

C. only visible trade

D. all economic transactions between residents of a country and the rest of the world

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Correct Answer: Option D

Explanation:
The Balance of Payments records all economic transactions between residents and the rest of the world.

This question belongs to: Economy GK Economy Set 1

Question #3

The term 'Primary Deficit' is defined as:

A. Revenue deficit minus interest payments

B. Fiscal deficit plus interest payments

C. Budget deficit minus interest payments

D. Fiscal deficit minus interest payments

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Correct Answer: Option D

Explanation:
Primary deficit = Fiscal deficit − Interest payments. It indicates the borrowing requirement of the government excluding interest payments on previous borrowings.

This question belongs to: Economy GK Economy Set 1

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