TNPSC - Economics Important Questions with Answers - 2

1. Which one of the following pairs is called an open market operation? 
(a) Selling and buying of securities or bills by the central bank 
(b) Selling and buying of foreign exchange 
(c) Selling and buying of shares by the foreign institutional investors 
(d) Selling and buying of gold in the open market by commercial banks 
Answer: A

2. Which one of the following is a source of non-tax revenue for governments? 
(a) Import duty on cars 
(b) Octroi at check points on roads 
(c) Entrance fee to museums 
(d) Excise duty on beverages
Answer: C

3. The Laffer Curve explains the relationship between which of the following? 
(a) Tax rates and tax revenue 
(b) Tax rates and employment 
(c) Tax rates and income 
(d) Tax rates and government expenditure
Answer: A

4. What does an increase in the ratio of revenue deficit to gross fiscal deficit indicate? 
(a) An increase in investment 
(b) an increase in the utilization of borrowed funds for revenue purposes 
(c) An increase in the utilization of borrowed funds for imports 
(d) An increase in the utilization of borrowed funds for lending
Answer: B

5. Which of the following is not a non-tariff barrier? 
(a) Voluntary export restraint 
(b) Health and product standards 
(c) Environmental protection laws 
(d) Ad-valorem duties
Answer: D

6. In the Balance-of-Payment Account, the transfer payments are included in which one of the following? 
(a) Current account 
(b) Service account 
(c) Capital account 
(d) Official Reserves account
Answer: A

7. Which one of the following explains Balance-of-Payment adjustment mechanism under the gold standard? 
(a) Devaluation 
(b) Flexible exchange rates
(c) Income-adjustment mechanism 
(d) Price-specie flow mechanism
Answer: D

8. Which of the following is the highest form of economic integration among different nations? 
(a) Custom Union 
(b) Free Trade Area 
(c) Economic Union 
(d) Common Market
Answer: D

9. Which one of the following best characterizes the Bretton Woods System of exchange rates? 
(a) Adjustable fixed exchange rates 
(b) Fixed exchange rates 
(c) Adjustable pegged exchange rates 
(d) Pegged exchange rates
Answer: C

0. Which of the following is meant by growth in the context of growth and development? 
(a) Growth of gross national product in money terms 
(b) Growth of per capita income in money terms 
(c) Growth of gross national product in real terms 
(d) Growth of per capita income in real terms
Answer: D

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