Which of the following is a feature of the 'Climate-Related Financial Risks' discussion in central banking? MCQ with Answer and Explanation

Question

Which of the following is a feature of the 'Climate-Related Financial Risks' discussion in central banking?

A. Physical and transition risks associated with climate change can affect the stability of the financial system and the transmission of monetary policy

B. Only physical risks matter and transition risks are irrelevant

C. Climate change is completely irrelevant for financial stability

D. Central banks have no role in assessing climate risks

Answer: Option A

Solution (By JKSSB Mock Tests)

Climate-related financial risks comprise physical risks (damage from extreme weather) and transition risks (losses from the adjustment to a low-carbon economy); both can impair financial institutions and the broader financial system.

This question belongs to: Economy GK Economy Set 1

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Which of the following is an example of a negative externality?

A. Vaccination

B. Pollution from industrial activity

C. Education

D. Research and development

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Correct Answer: Option B

Explanation:
A negative externality imposes costs on third parties. Industrial pollution harms the environment and health of people who are not parties to the production decision.

This question belongs to: Economy GK Economy Set 1