Question : Which of the following is not true when the interest rate in the economy goes up?
Option 1: Saving increases
Option 2: Lending decreases
Option 3: Cost of production increases
Option 4: Return on capital increases
Correct Answer: Return on capital increases
Solution : The correct answer is the Return on capital increases.
On a macroeconomic level, interest rates are the primary determinant of investment. The current theory holds that if interest rates rise everywhere, investment will decline, resulting in a decline in the national income. Higher rates encourage more saving, which leads to more investment and jobs, which boosts output and profits.
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Question : What will happen to the level of water in a vessel when a piece of ice floating in it melts?
Option 1: Decreases
Option 2: Increases
Option 3: Remains same
Option 4: First increases and then decreases
Question : If the average cost falls, the marginal cost
Option 1: increase at a higher rate
Option 2: to fall at the same rate
Option 3: increases at a lower rate
Option 4: to fall at a higher rate
Question : Which of the following statements is correct?
Option 1: Atomic radius increases across a period and decreases down a group in the periodic table.
Option 2: Atomic radius decreases across a period and increases down a group in the periodic table.
Option 3: Atomic radius decreases across a period and down a group in the periodic table.
Option 4: Atomic radius increases across a period and increases down a group in the periodic table.
Question : _____ is a situation of a low rate of interest in the economy where every economic agent expects the interest rate to rise in future and consequently bond prices to fall, causing capital loss.
Option 1: Liquidity trap
Option 2: Revenue deficit
Option 3: Parametric shift
Option 4: Paradox shift
Question : The rate of interest per annum at which the total simple interest of a certain capital for 1 year is equal to the total simple interest of the same capital at the rate of 5% per annum for 2 years, is:
Option 1: $\frac{5}{2}$%
Option 2: $10$%
Option 3: $25$%
Option 4: $12.5$%
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