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CET 12th Level — Inflation, Recession, and GDP MCQs

Practice 20 free inflation, recession, and gdp multiple choice questions for CET 12th Level exam. Instant answers with explanations in Hindi and English.

Master Inflation, Recession, and GDP under World Economy for CET 12th Level with our curated MCQ set. Every question follows real Rajasthan exam patterns. Switch between Hindi and English anytime.

CET 12th Level — World Economy — Inflation, Recession, and GDP

20 Questions • Instant results & explanations • Hindi & English

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Question 1 of 20

Which specific sector is completely ignored by the Wholesale Price Index (WPI), making it less representative of the modern economy compared to CPI?

Question 2 of 20

Consider the following statements regarding the structural determinants of recession: 1. A collapse of a housing bubble stimulates aggregate demand by freeing up consumer capital. 2. Exogenous events like global embargoes strictly cause inflation, not recessions. 3. The unwinding of unsustainable credit cycles often leads to massive loan defaults and banking distress. Which of the statements given above is/are correct?

Question 3 of 20

Given below are two statements, one labeled as Assertion (A) and the other as Reason (R): Assertion (A): The GDP Deflator is considered a superior, dynamic measure of price behavior compared to CPI and WPI. Reason (R): The GDP Deflator covers all domestically produced goods and services and automatically adjusts for changing consumption patterns. Select the correct answer using the codes given below:

Question 4 of 20

Which of the following describes the 'Shoeleather Costs' associated with high inflation?

Question 5 of 20

According to the principles of macroeconomics, what effect does high inflation have on the distribution of wealth regarding historical loans?

Question 6 of 20

Match List-I with List-II and select the correct answer using the codes given below: List-I (Determinant/Impact) A. Contractionary Monetary Policy B. Imported Inflation C. Menu Costs List-II (Economic Phenomenon) 1. Depreciating domestic currency making crude oil expensive 2. Tangible expense of updating price lists in hyperinflation 3. Increasing cost of capital to choke private borrowing Codes: A B C

Question 7 of 20

Which specific inflation index in India underwent a major shift in policy reliance in 2014, shifting its role from the primary anchor to a secondary metric, due to its exclusion of the services sector?

Question 8 of 20

In the context of inflation, what is the core premise of a 'wage-price spiral'?

Question 9 of 20

Which of the following scenarios describes the calculation required to determine the GDP Deflator?

Question 10 of 20

According to the principles of macroeconomics, how does an aggressively administered contractionary monetary policy induce a recession?

Question 11 of 20

Consider the following components of an economy: 1. Compensation of employees 2. Rent and Interest 3. Operating surplus 4. Net Exports Which of the components listed above are used exclusively in the 'Income Method' of calculating GDP?

Question 12 of 20

Given below are two statements, one labeled as Assertion (A) and the other as Reason (R): Assertion (A): High inflation prevents nominal wage rigidity in the economy. Reason (R): High inflation acts as a deeply regressive tax that severely erodes the purchasing power of the most vulnerable citizens. Select the correct answer using the codes given below:

Question 13 of 20

Which of the following best defines the 'Production Method' (Value Added Method) for measuring a nation's GDP?

Question 14 of 20

Consider the following statements regarding the Quantity Theory of Money (MV=PT): 1. 'M' stands for the mass of manufactured goods. 2. In the short run, 'V' (velocity) and 'T' (transactions) are relatively inflexible. 3. According to the theory, injecting liquidity without increasing real output drives up the general price level. Which of the statements given above is/are correct?

Question 15 of 20

What is the primary reason the Consumer Price Index (CPI) is considered a more reflective measure of the modern economy's inflation than the Wholesale Price Index (WPI)?

Question 16 of 20

During a period of severe inflation, which of the following is an example of a 'Menu Cost' incurred by a business?

Question 17 of 20

Given below are two statements, one labeled as Assertion (A) and the other as Reason (R): Assertion (A): Central banks raising interest rates to combat inflation can precipitate an economic recession. Reason (R): Raising interest rates increases the cost of capital, which chokes off corporate borrowing and stifles private investment and consumer spending. Select the correct answer using the codes given below:

Question 18 of 20

Which of the following macroeconomic indicators is calculated by dividing Nominal GDP by Real GDP and multiplying the result by 100?

Question 19 of 20

Which of the following options correctly identifies the consequences of central bank monetization of fiscal deficits?

Question 20 of 20

Match List-I with List-II and select the correct answer using the codes given below: List-I (Economic Shocks/Determinants) A. Pandemic disrupting global supply chains B. Depreciation of domestic currency C. Expectations of higher future inflation by workers List-II (Resulting Phenomenon) 1. Self-fulfilling Wage-price spiral 2. External Shock precipitating a recession 3. Imported Inflation due to expensive crude oil Codes: A B C

More World Economy Subtopics

Practice other subtopics under World Economy to strengthen your CET 12th Level preparation.