About this quiz
50 questions covering every section of the note.
This Lok Sewa practice set has 50 multiple-choice questions (Subject: Economics and Planning · For: Kharidar, Nayab Subba, Section Officer · Level: Easy). Take the quiz above first; after that, use the study list below to revise every question with its correct answer and a short explanation.
Study list: all 50 questions with answers and explanations
A continuous rise in the general price level is called:
- A) Deflation
- B) Inflation ✔
- C) Recession
- D) Devaluation
Why: Inflation is a continuous rise in the general price level, which means each rupee buys less than before.
Inflation in Nepal is measured by the:
- A) Consumer Price Index ✔
- B) Gini coefficient
- C) HDI
- D) MPI
Why: Inflation is measured by the Consumer Price Index (CPI), which tracks prices of a basket of goods and services households buy.
Who publishes the CPI in Nepal?
- A) Nepal Rastra Bank ✔
- B) Ministry of Finance
- C) NPC
- D) IRD
Why: Nepal Rastra Bank publishes the national Consumer Price Index and reports inflation regularly.
Too much money chasing too few goods causes:
- A) Cost-push inflation
- B) Demand-pull inflation ✔
- C) Deflation
- D) Stagflation
Why: When total demand grows faster than supply ('too much money chasing too few goods'), prices rise: demand-pull inflation.
Rising fuel and wage costs causing price rise is:
- A) Demand-pull inflation
- B) Cost-push inflation ✔
- C) Disinflation
- D) Deflation
Why: When production costs such as fuel, wages or raw materials rise, producers raise prices: cost-push inflation.
High inflation with high unemployment is called:
- A) Stagflation ✔
- B) Hyperinflation
- C) Disinflation
- D) Reflation
Why: Stagflation is high inflation together with high unemployment and slow growth, as in the 1970s oil crisis.
A continuous fall in the general price level is:
- A) Inflation
- B) Deflation ✔
- C) Stagflation
- D) Galloping inflation
Why: Deflation is a continuous fall in the general price level. It can reduce spending and investment.
Inflation in Nepal is closely linked to inflation in:
- A) China
- B) India ✔
- C) USA
- D) Japan
Why: Nepal imports a lot from India and its rupee is pegged to the Indian rupee, so Indian inflation strongly affects Nepal's prices.
Inability to meet basic needs is:
- A) Relative poverty
- B) Absolute poverty ✔
- C) Inequality
- D) Inflation
Why: Absolute poverty means not having enough income to meet basic needs such as food, clothing and shelter.
The Multidimensional Poverty Index measures deprivation in:
- A) Health, education and living standards ✔
- B) Only income
- C) Only food
- D) Only housing
Why: The MPI measures deprivation in three dimensions: health, education and living standards (such as cooking fuel, sanitation, water and housing).
The MPI was developed by UNDP and:
- A) World Bank
- B) Oxford (OPHI) ✔
- C) IMF
- D) WTO
Why: The global MPI was developed in 2010 by UNDP and the Oxford Poverty and Human Development Initiative (OPHI).
A Gini coefficient of 0 means:
- A) Perfect inequality
- B) Perfect equality ✔
- C) High poverty
- D) High inflation
Why: A Gini coefficient of 0 means perfect equality: everyone has the same income. 1 means one person has everything.
Nepal measures income poverty through the:
- A) NLSS ✔
- B) Census only
- C) Economic Survey only
- D) Labour Force Survey only
Why: Income poverty is measured through the Nepal Living Standards Survey (NLSS), a large household survey.
According to NLSS IV, about what share of Nepalis are below the poverty line?
- A) 10%
- B) 20% ✔
- C) 30%
- D) 40%
Why: NLSS IV (2022/23) found about 20% (20.27%) of Nepalis below the national poverty line.
When more people work on a farm than needed, it is:
- A) Open unemployment
- B) Disguised unemployment ✔
- C) Frictional unemployment
- D) Cyclical unemployment
Why: Disguised unemployment: extra workers seem employed, but removing them would not reduce output, as on small family farms.
Unemployment in certain seasons only is:
- A) Seasonal unemployment ✔
- B) Structural unemployment
- C) Cyclical unemployment
- D) Educated unemployment
Why: Seasonal unemployment happens when work is available only in certain seasons, such as farm labour outside planting and harvest.
Mismatch between skills and available jobs causes:
- A) Structural unemployment ✔
- B) Frictional unemployment
- C) Seasonal unemployment
- D) Disguised unemployment
Why: Structural unemployment comes from a mismatch between people's skills and the jobs available, or from changes in the economy.
Temporary unemployment while changing jobs is:
- A) Frictional ✔
- B) Cyclical
- C) Seasonal
- D) Disguised
Why: Frictional unemployment is short-term unemployment while people move between jobs or look for their first job.
The Prime Minister Employment Programme began in:
- A) 2065 BS
- B) 2075 BS ✔
- C) 2080 BS
- D) 2058 BS
Why: The Prime Minister Employment Programme began in 2075 BS to give the registered unemployed a minimum number of days of paid work.
Lack of jobs at home is a major cause of:
- A) Foreign labour migration ✔
- B) Deflation
- C) Higher exports
- D) Lower remittance
Why: Lack of decent jobs in Nepal pushes many young people to work abroad, mainly in the Gulf, Malaysia and India.
Inflation caused by rising demand is called:
- A) Demand-pull inflation ✔
- B) Cost-push inflation
- C) Deflation
- D) Stagflation
Why: Inflation caused by demand rising faster than supply is demand-pull inflation.
A fall in the rate of inflation (prices still rising, but slower) is:
- A) Disinflation ✔
- B) Deflation
- C) Hyperinflation
- D) Reflation
Why: Disinflation means prices are still rising but more slowly, for example inflation falling from 8% to 5%.
Extremely rapid inflation is called:
- A) Hyperinflation ✔
- B) Disinflation
- C) Creeping inflation
- D) Deflation
Why: Hyperinflation is extremely rapid inflation, often over 50% a month, as in Zimbabwe in the 2000s.
Mild, slow inflation is called:
- A) Creeping inflation ✔
- B) Hyperinflation
- C) Galloping inflation
- D) Stagflation
Why: Creeping inflation is mild, slow inflation of a few percent a year, usually seen as normal.
Who is hurt most by inflation?
- A) People on fixed incomes ✔
- B) Debtors
- C) Producers with stock
- D) Exporters
Why: People on fixed incomes, such as pensioners and salaried workers, are hurt most because their income does not rise with prices.
Inflation tends to benefit:
- A) Borrowers (debtors) ✔
- B) Savers
- C) Pensioners
- D) Lenders
Why: Borrowers benefit because they repay loans with money that is worth less than when they borrowed it.
Nepal's currency is pegged to the Indian rupee at:
- A) NPR 1.60 = INR 1 ✔
- B) NPR 1 = INR 1
- C) NPR 2 = INR 1
- D) NPR 1.20 = INR 1
Why: Nepal's rupee is pegged to the Indian rupee at NPR 1.60 = INR 1.
The main tool for controlling inflation is:
- A) Monetary policy ✔
- B) Census
- C) Election
- D) Tourism
Why: Monetary policy, by the central bank, controls inflation by managing money supply and interest rates.
Nepal Rastra Bank announces its monetary policy:
- A) Every fiscal year ✔
- B) Every five years
- C) Every month
- D) Every decade
Why: NRB announces its monetary policy every fiscal year, usually soon after the federal budget, and reviews it during the year.
CRR stands for:
- A) Cash Reserve Ratio ✔
- B) Credit Rate Return
- C) Central Reserve Rule
- D) Capital Risk Ratio
Why: CRR is the Cash Reserve Ratio: the share of deposits banks must keep with the central bank.
Raising the CRR generally:
- A) Reduces money supply ✔
- B) Increases money supply
- C) Has no effect
- D) Increases prices
Why: A higher CRR means banks must keep more money with NRB, so they have less to lend, which reduces money supply and helps control inflation.
The Phillips curve shows a relation between:
- A) Inflation and unemployment ✔
- B) GDP and population
- C) Exports and imports
- D) Tax and spending
Why: The Phillips curve shows an inverse relation in the short run between inflation and unemployment.
Absolute poverty means:
- A) Income below the minimum needed for basic needs ✔
- B) Being poorer than neighbours
- C) Having no car
- D) Low savings only
Why: Absolute poverty means income below the minimum needed for basic needs.
Relative poverty compares a person's income with:
- A) Others in society ✔
- B) A fixed basket only
- C) World Bank line only
- D) Last year
Why: Relative poverty compares a person's income with others in society, for example those earning far below the average.
According to NLSS IV (2022/23), about what share of Nepalis are below the poverty line?
- A) About 20% ✔
- B) About 5%
- C) About 40%
- D) About 60%
Why: About 20% of Nepalis were below the poverty line in NLSS IV.
The Lorenz curve is used to show:
- A) Income inequality ✔
- B) Inflation
- C) Population growth
- D) Trade balance
Why: The Lorenz curve shows how income is distributed; the further it bends from the equality line, the greater the inequality.
A Gini coefficient of 1 means:
- A) Perfect inequality ✔
- B) Perfect equality
- C) No income
- D) Average inequality
Why: A Gini coefficient of 1 means perfect inequality: one person has all the income.
The MPI measures poverty in health, education and:
- A) Living standards ✔
- B) Income only
- C) Trade
- D) Tourism
Why: The third MPI dimension is living standards, such as electricity, water, sanitation, cooking fuel, housing and assets.
Disguised unemployment is common in:
- A) Agriculture ✔
- B) IT sector
- C) Banking
- D) Airlines
Why: Disguised unemployment is common in agriculture, where many family members work on small plots that need fewer people.
Unemployment due to economic slowdown is:
- A) Cyclical unemployment ✔
- B) Seasonal
- C) Frictional
- D) Disguised
Why: Cyclical unemployment rises during economic slowdowns or recessions, when demand falls.
Underemployment means:
- A) Working less than capacity or below skill ✔
- B) Not working at all
- C) Working overtime
- D) Retired
Why: Underemployment means working fewer hours than wanted or in a job below one's skills.
Nepal's labour force data come from the:
- A) Nepal Labour Force Survey ✔
- B) Census only
- C) Budget speech
- D) Economic Survey only
Why: Labour force data come from the Nepal Labour Force Survey (NLFS) by the National Statistics Office.
The Prime Minister Employment Programme guarantees:
- A) Minimum days of employment to the unemployed ✔
- B) Free housing
- C) Free education
- D) Foreign jobs
Why: It aims to give the registered unemployed a minimum number of days of paid work each year, mainly through local levels.
Right to employment is guaranteed in the constitution under:
- A) Article 33 ✔
- B) Article 36
- C) Article 16
- D) Article 31
Why: Article 33 gives every citizen the right to employment and to choose employment, as provided by law.
Remittance helps reduce poverty by:
- A) Raising household income ✔
- B) Lowering exports
- C) Raising imports only
- D) Reducing GDP
Why: Remittance raises household income, which pays for food, education and health care.
Inflation in Nepal is often high because many goods are:
- A) Imported from India ✔
- B) Exported to China
- C) Produced in excess
- D) Free
Why: Many goods are imported from India, so price rises there pass directly into Nepal.
A rise in fuel prices causing general price rise is an example of:
- A) Cost-push inflation ✔
- B) Demand-pull inflation
- C) Deflation
- D) Disinflation
Why: Higher fuel prices raise transport and production costs, pushing up prices: cost-push inflation.
Deflation can cause:
- A) Lower spending and unemployment ✔
- B) Higher growth always
- C) More inflation
- D) No effects
Why: When prices keep falling, people delay buying, so sales, production and jobs fall.
The poverty line is the:
- A) Minimum income needed for basic needs ✔
- B) Highest income
- C) Average salary
- D) Tax limit
Why: The poverty line is the minimum income or spending needed for basic needs; people below it are counted as poor.
The base year in CPI is used to:
- A) Compare prices with a reference year ✔
- B) Set taxes
- C) Count population
- D) Calculate GDP only
Why: The base year is the reference year (index = 100) against which current prices are compared.