List of top Economics Questions on Money and Inflation

Money has following functions: A. Medium of Exchange, B. Unit of account, C. Store of value, D. Measure of Economic Uncertainty, E. Measure of Happiness.

Select correct answers in regard of Phillips curve: A. The short run Phillips curve is negative sloped, B. Long run Phillips curve is steeper in slope than short run curve, C. Over the time Phillips curve has tendency to be parallel to x-axis, D. The Phillips curve shows positive relationship between inflation and money, E. Inflation expectations plays a major role in wage negotiations.

Sequence the evolution of money demand theories oldest to latest: A. Friedman's Restatement of quantity theory, B. Inventory theory of transactions demand, C. Cambridge Cash Balance approach, D. Liquidity Preference theory, E. Portfolio Balance Model.

Sequence the working of money multiplier in correct order: A. RBI injects High Powered Money, B. Banks keep required reserves, C. Banks receives deposits, D. Banks gives loans, E. Deposit expansion.

Given below are two statements: one is labelled as Assertion A and the other is labelled as Reason R. Assertion A: The nominal interest rate can be misleading guide to cost of borrowing. Reason R: The real interest rate is nominal rate of interest plus the rate of inflation.

The interest rate and price level are jointly determined by simultaneous equilibrium of:

In the case of classical economics, an increase in the nominal money stock causes

Why is the Phillips curve negatively sloped?

Arrange the following rates in ascending order.
(A) Repo Rate
(B) Lending Rate
(C) Deposit Rate
(D) Reverse Repo Rate

Which of the followings are correct in the context of inflation?
(A) Higher aggregate demand may lead to demand-pull inflation.
(B) Higher cost of production may lead to cost-push inflation.
(C) Higher international food and fuel prices may lead to inflation.
(D) Higher indirect taxes and lower subsidy may lead to inflation.

What does a bank do if there are no excess reserves?

The existence of purchasing power parity in an open economy implies that
(A) The purchasing power of individuals depends on inflation rate
(B) The exchange rate between two countries' currency is equal to the ratio of their price levels
(C) Law of one price holds
(D) The price levels of all countries are equal when measured in terms of the same currency
Choose the correct answer from the options given below:

If the expected rate of return from the investment projects in India be 10% per annum, and if the exchange rate becomes Rs.88 per USD from Rs.80 per USD in one year, what would be the expected amount of profit in terms of US Dollar from an investment project of 100 Million USD in India from the point of view of an investor from the USA?

What would happen to the rate of interest, in new equilibrium, if the money supply rises in the Mundell-Fleming model under the flexible exchange rate and absolutely free capital mobility, if the international interest rate remains the same?

Match List-I with List-II:

List-I		List-II
A	Money supply is exogenously given.	I	Post-Keynesian school
B	Money supply is demand driven and credit led.	II	Say’s law
C	Rational expectation.	III	Monetarism
D	Supply creates its own demand	IV	Neo-classical school

Choose the correct answer from the options given below

“During the colonial period the agricultural sector showed massive stagnation.” Do you agree with the given statement? Justify your answer with valid arguments.

“There exists a positive correlation between human capital formation and economic growth of a nation.” Justify the given statement with valid explanation.

“Amita is a regular worker in a private firm that employs twelve hired workers.” Is she working in the formal/informal sector? Give valid reasons in support of your answer.

\[ \begin{array}{|c|c|c|c|c|c|} \hline \textbf{Sector} & \textbf{India} & \textbf{China} & \textbf{Pakistan} & \textbf{India} & \textbf{China} & \textbf{Pakistan} \\ \hline \text{Agriculture} & 16 & 7 & 24 & 43 & 26 & 41 \\ \hline \text{Industry} & 30 & 41 & 19 & 25 & 28 & 22 \\ \hline \text{Services} & 54 & 52 & 57 & 32 & 46 & 35 \\ \hline \end{array} \]

“Self-Help Groups provide stimulus to socio-economic development in rural areas.”
Justify the given statement with a valid explanation.

___ farming is a system that is helpful in restoring, maintaining, and enhancing the ecological balance.
(Choose the correct alternative to fill in the blank):