By definition, hyperinflation is a rapid increase in Price Index (the Money Supply multiplied by the velocity of money) without a corresponding increase in real output (see Equation of exchange). This is often caused by decisions on the part of the central bank to increase the money supply much more than markets had previously expected, often when money is printed to finance government spending. This results in a fall in the demand for money relative to its supply, which in an extreme case can grow into a complete loss of confidence in the money, similar to a bank run. This loss of confidence causes a rapid increase in velocity of spending which causes a corresponding rapid increase in prices. For example, once inflation has become established, sellers try to hedge against it by increasing prices. This leads to further waves of price increases.

Hyperinflation will continue as long as the entity responsible for increasing bank credit and/or printing currency continues to promote excessive money creation. In severe cases, legal tender laws and price controls to prevent discounting the value of paper money relative to hard currency or commodities can fail to force acceptance of the rapidly increasing money supply which lacks intrinsic value, in which case hyperinflation usually continues until the currency is abandoned entirely.

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13. Which of the following phenomena are associated with the demographic dividend?

1. A rising share of working age people in a population
2. Rise in fertility rate
3. Decline in youth dependency rate

(a) 1 only
(b) 1 and 2
(c) 1 and 3
(d) 1, 2 and 3

Detailed Answer

Correct Answer is : (c) 1 and 3

The demographic dividend is a rise in the rate of economic growth due to a rising share of working age people in a population. This usually occurs late in the demographic transition when the fertility rate falls and the youth dependency rate declines. During this demographic window of opportunity, output per capita rises. It has been argued that the demographic dividend played a role in the "economic miracles" of the East Asian Tigers and that the economic boom in Ireland in the 1990s (the Celtic tiger) was in part due to the legalization of contraception in 1979 and subsequent decline in the fertility rate. In Ireland the ratio of workers to dependents improved due to lower fertility but was raised further by increased female labor market participation and a reversal from outward migration of working age population to a net inflow. Africa, on the other hand continues to have high fertility and youth dependency rates

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14. Carbon credits were one of the outcomes of the

(a) Montreal Protocol
(b) Copenhagen Summit
(c) UNFCCC
(d) Kyoto Protocol

Detailed Answer

Correct Answer is : (d) Kyoto Protocol

The concept of carbon credits came into existence as a result of increasing awareness of the need for pollution control.
Carbon credits were one of the outcomes of the Kyoto Protocol, an international agreement between 169 countries. The Kyoto Protocol created legally binding emission targets for developing nations. To meet these targets, nations must limit C02 emissions. It was enforced from Feb’05.
The very phase “Kyoto Protocol” has become synonymous with the idea of saving the planet from the global meltdown.
This can be accomplished by either reducing emissions or by absorbing emissions through processes such as tree-planting and sequestration., which contribute to its economic stagnation. The magnitude of the demographic dividend appears to be dependent on the ability of the economy to absorb and productively employ the extra workers, rather than be a pure demographic gift.

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15. What is Bisphenol A (BPA)?

(a) A medical test for detecting cancer
(b) A test for testing the use of drugs to improve performance by atheletes
(c) A chemical used for the development of foodpackaging materials
(d) A special type of alloy steel

Detailed Answer

Correct Answer is : (c) A chemical used for the development of food-packaging materials Bisphenol A (BPA) is a synthetic chemical compound used in a wide range of consumer products and is classed by the Government of Canada as a hormone disruptor. Who is exposed to Bisphenol A? Everyone. Bisphenol A is found in many everyday products including food cans, plastic water containers and baby bottles. A study in the US found that 95% of people tested had been exposed to BPA.

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