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Impact of Economic Conditions on Stability

Description: This quiz is designed to assess your understanding of the impact of economic conditions on stability.
Number of Questions: 15
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Tags: indian politics political stability economic conditions
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Which of the following is NOT a factor that can contribute to economic instability?

  1. High unemployment

  2. Low inflation

  3. High government debt

  4. Rapid economic growth


Correct Option: D
Explanation:

Rapid economic growth can actually help to improve economic stability by creating jobs and boosting incomes.

How can high unemployment lead to political instability?

  1. It can lead to social unrest and protests.

  2. It can reduce tax revenues and government spending.

  3. It can make it difficult for businesses to operate.

  4. All of the above


Correct Option: D
Explanation:

High unemployment can lead to all of the above, which can in turn contribute to political instability.

Which of the following is NOT a potential consequence of high government debt?

  1. Higher interest rates

  2. Lower economic growth

  3. Increased risk of default

  4. Improved credit rating


Correct Option: D
Explanation:

High government debt can lead to higher interest rates, lower economic growth, and an increased risk of default, but it is unlikely to improve a country's credit rating.

How can low inflation contribute to economic stability?

  1. It can help to keep interest rates low.

  2. It can make it easier for businesses to plan for the future.

  3. It can reduce the risk of a recession.

  4. All of the above


Correct Option: D
Explanation:

Low inflation can help to keep interest rates low, make it easier for businesses to plan for the future, and reduce the risk of a recession.

Which of the following is NOT a potential impact of economic instability on political stability?

  1. Increased risk of social unrest

  2. Reduced public trust in the government

  3. Increased likelihood of political violence

  4. Improved voter turnout


Correct Option: D
Explanation:

Economic instability is more likely to lead to decreased voter turnout, as people may be less likely to participate in the political process when they are struggling economically.

How can governments use fiscal policy to promote economic stability?

  1. By increasing government spending during economic downturns

  2. By cutting taxes during economic downturns

  3. By raising interest rates during economic downturns

  4. By reducing government spending during economic downturns


Correct Option: A
Explanation:

Governments can use fiscal policy to promote economic stability by increasing government spending during economic downturns, which can help to stimulate the economy and create jobs.

Which of the following is NOT a potential impact of economic instability on businesses?

  1. Reduced investment

  2. Increased risk of bankruptcy

  3. Lower profits

  4. Increased sales


Correct Option: D
Explanation:

Economic instability is more likely to lead to reduced sales, as people may be less likely to spend money when they are uncertain about the future.

How can central banks use monetary policy to promote economic stability?

  1. By raising interest rates during economic downturns

  2. By lowering interest rates during economic downturns

  3. By increasing the money supply during economic downturns

  4. By decreasing the money supply during economic downturns


Correct Option: B
Explanation:

Central banks can use monetary policy to promote economic stability by lowering interest rates during economic downturns, which can help to stimulate the economy and create jobs.

Which of the following is NOT a potential impact of economic instability on individuals?

  1. Increased poverty

  2. Reduced job security

  3. Lower wages

  4. Higher standard of living


Correct Option: D
Explanation:

Economic instability is more likely to lead to a lower standard of living, as people may have less money to spend on goods and services.

How can governments use structural reforms to promote economic stability?

  1. By reducing government regulations

  2. By privatizing state-owned enterprises

  3. By investing in infrastructure

  4. All of the above


Correct Option: D
Explanation:

Governments can use structural reforms to promote economic stability by reducing government regulations, privatizing state-owned enterprises, and investing in infrastructure.

Which of the following is NOT a potential impact of economic instability on the environment?

  1. Increased pollution

  2. Deforestation

  3. Climate change

  4. Improved air quality


Correct Option: D
Explanation:

Economic instability is more likely to lead to increased pollution, deforestation, and climate change, as businesses and individuals may be less likely to invest in environmental protection.

How can international cooperation help to promote economic stability?

  1. By coordinating fiscal and monetary policies

  2. By promoting free trade

  3. By providing financial assistance to countries in need

  4. All of the above


Correct Option: D
Explanation:

International cooperation can help to promote economic stability by coordinating fiscal and monetary policies, promoting free trade, and providing financial assistance to countries in need.

Which of the following is NOT a potential impact of economic instability on the financial system?

  1. Increased risk of bank failures

  2. Reduced access to credit

  3. Higher interest rates

  4. Improved financial stability


Correct Option: D
Explanation:

Economic instability is more likely to lead to increased risk of bank failures, reduced access to credit, and higher interest rates, as banks and other financial institutions become more cautious about lending.

How can governments use social safety nets to promote economic stability?

  1. By providing unemployment benefits

  2. By providing food assistance

  3. By providing housing assistance

  4. All of the above


Correct Option: D
Explanation:

Governments can use social safety nets to promote economic stability by providing unemployment benefits, food assistance, and housing assistance to those in need.

Which of the following is NOT a potential impact of economic instability on public health?

  1. Increased risk of disease

  2. Reduced access to healthcare

  3. Higher mortality rates

  4. Improved public health


Correct Option: D
Explanation:

Economic instability is more likely to lead to increased risk of disease, reduced access to healthcare, and higher mortality rates, as people may have less money to spend on healthcare and may be more likely to live in unhealthy conditions.

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