Answer: C

Explanation:

Unlike core inflation, headline inflation takes into account changes in the price of food and energy. Since food and energy prices are highly volatile, headline inflation may not give an accurate picture of how an economy is behaving. Reserve Bank of India (RBI) uses CPI-combined as the key inflation measure for the purpose of monetary policy. Consumer Price Index Numbers for Industrial Workers, which measure a change over time in prices of a fixed basket of goods and services consumed by Industrial Workers, are compiled and maintained by the Labour Bureau since its inception. Hence, all statements are correct.

Answer: B

Explanation:

An irony about middle income countries is that many of them are not moving up to the higher income category. This situation of falling at the middle-income level is called the middle-income trap by economists. The “middle-income trap” is the phenomenon of hitherto rapidly growing economies stagnating at middle-income levels (of per capita income) and failing to graduate into the ranks of high-income countries. At the same time, many other countries have made significant progress through industrialization. They were able to expand the national income and thus the per capita income. Hence, option (b) is correct.

Answer: A

Explanation:

Sterilization involves the infusion and extraction of liquidity in the market by the Central bank to control the total money supply in the economy. This keeps the exchange rate stable and thus blocks its free adjustment. Hence, statement 1 is correct.

A nation usually exports a commodity of its comparative advantage meaning that it specializes in the export of those commodities that it can produce cheaply or at more competitive rates than the global economy. This aids trade and does not block the free adjustment in the exchange rates. Hence, statement 2 is incorrect.

Answer: B

Explanation:

Macroeconomics indeed focuses on the overall performance of an economy, including aspects like gross domestic product (GDP), inflation, unemployment, and economic growth. Hence, statement 1 is correct.

Microeconomics, not macroeconomics, studies individual decision-making units like households and firms. Macroeconomics looks at these units in an aggregate manner. Hence, statement 2 is incorrect.

Inflation, unemployment, and economic growth are three of the most crucial macroeconomic concerns as they significantly impact the overall stability and well-being of an economy. Hence, statement 3 is correct

Answer: C

Explanation:

Capitalist Economy : This is a core principle of capitalism, where private individuals and businesses own and control the means of production, and market forces like supply and demand dictate economic activity. Government involvement is typically limited to providing a legal framework, enforcing contracts, and regulating certain industries.

Socialist Economy : In a socialist system, the government owns and controls the means of production, and central planning authorities dictate what, how much, and for whom goods and services are produced. Market forces play a lesser role, and prices are often set by the government.

Mixed Economy : Most real-world economies today are mixed economies, blending elements of capitalism and socialism. This means that both private and public sectors play significant roles in the economy, with market forces driving some sectors and government intervention influences others. The degree of government involvement can vary across different mixed economies.