Static Quiz 12 October 2024 (Economy)

Stock refers to any quantity that is measured at a particular point in time, while flow is referred to as the quantity that can be measured over a period of time. Hence Statement 2 is correct.
National Income is measured over a period of one year. Therefore, it is a flow variable. Hence Statement 1 is correct.

Gross fixed capital formation (GFCF) refers to the net increase in physical assets (investment minus disposals). It does not account for the consumption (depreciation) of fixed capital. Hence Statement 1 is wrong.
It is a component of expenditure approach to calculating Gross Domestic Product (GDP). It includes the Intermediate Consumption of the government. Hence Statement 2 is correct.
GFCF is not a measure of total investment, because only the value of net additions to fixed assets is measured, and all kinds of financial assets, as well as stocks of inventories and other operating costs are excluded.

Philips Curve – The Phillips curve is an economic concept developed by A. W. Phillips stating that inflation and unemployment have a stable and inverse relationship. The theory claims that with economic growth comes inflation, which in turn should lead to more jobs and less unemployment. Hence Option a is correct.
Kuznets’ work on economic growth and income distribution led him to hypothesize that industrializing nations experience a rise and subsequent decline in economic inequality, characterized as an inverted “U”—the “Kuznets curve.”
The Laffer Curve is a theory formalized by supply-side economist Arthur Laffer to show the relationship between tax rates and the amount of tax revenue collected by governments. The curve is used to illustrate the argument that sometimes cutting tax rates can result in increased total tax revenue.
A Lorenz curve is a graphical representation of the distribution of income or wealth within a population. Lorenz curves graph percentiles of the population against cumulative income or wealth of people at or below that percentile.

Inflation is the rate of increase in prices over a given period of time. Inflation is typically a broad measure, such as the overall increase in prices or the increase in the cost of living in a country.
Creditors lose money because it becomes expensive. Though the money returned is same in terms of amount, it is less in terms of goods and purchases. Hence Statement 1 is correct.
Debtors gain money because they have to pay less in terms of goods and services. Hence Statement 2 is correct.

There are three components of the Fiscal Policy of India:
• Government Receipts
• Government Expenditure
• Public Debt
Inflation Targeting is included in the monetary policy. Hence Option c is correct.