SSC CGL Economy – Money & Inflation – Tier II Level · Marathon

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SSC CGL Economy – Money & Inflation – Tier II Level · Marathon – 10 questions, subject: Indian Economy. Every question has the correct answer with a one-line explanation; tap "Show Answer". Free practice for TNPSC, UPSC, SSC, Bank and RRB exams – Shanmugam IAS Academy, Coimbatore.

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1.  
Money supply grows by 10%, velocity is constant and real output grows by 6%. The quantity theory predicts inflation of about:

Correct Answer: B [4%]

Explanation:

%M + %V ≈ %P + %T → 10 + 0 ≈ %P + 6 → ≈ 4% (exact 3.77%).

2.  
If banks must keep 20% of deposits as reserves and the public holds no cash, the simple deposit multiplier is:

Correct Answer: C [5]

Explanation:

Answer: 5. Multiplier = 1 ÷ 0.20 = 5.

3.  
The short-run Phillips curve shows:

Correct Answer: D [an inverse relation between inflation and unemployment]

Explanation:

Lower unemployment comes with higher inflation in the short run.

4.  
Inflation of 50% a month is often used as a definition of:

Correct Answer: C [hyperinflation]

Explanation:

Very rapid, accelerating inflation = hyperinflation.

5.  
At a nominal interest rate of 9% and inflation of 4%, the exact real interest rate is closest to:

Correct Answer: A [4.81%]

Explanation:

1.09 ÷ 1.04 − 1 = 0.0481 → 4.81%.

6.  
Assertion–Reason
A: A low index a year ago can make this year's inflation rate look high.
R: Year-on-year inflation divides the change by last year's index.

Correct Answer: B [Both A and R are true and R explains A]

Explanation:

Answer: Both A and R are true and R explains A. This is the base effect.

7.  
Core inflation excludes:

Correct Answer: B [food and fuel items]

Explanation:

Core = headline minus the volatile food and fuel components.

8.  
Prices double in 12 years. The approximate annual inflation rate (rule of 70) is:

Correct Answer: D [about 6%]

Explanation:

Answer: about 6%. 70 ÷ 12 ≈ 5.8% → about 6%.

9.  
A fall in the value of money by 10% requires prices to have risen by:

Correct Answer: C [11.11%]

Explanation:

Value falls to 0.9 → prices rise to 1 ÷ 0.9 = 1.1111 → 11.11% (x ÷ (100 − x) = 10 ÷ 90).

10.  
The Minimum Reserve System requires the RBI to hold gold and foreign exchange of at least:

Correct Answer: A [₹ 200 crore, of which gold at least ₹ 115 crore]

Explanation:

RBI Act, Section 33 (Minimum Reserve System).

➤ Full notes, shortcuts and every answer explained – SSC CGL 2026 Indian Economy book (₹149): www.shanmugamiasacademy.in/study-materials/ssc-cgl-indian-economy

📘 SSC CGL 2026 – Indian Economy (Tier I + Tier II)
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