Daily Current Affairs Quiz: March 6, 2026

1. The financial sector includes institutions and markets that deal with money, credit, and investments rather than physical goods.
2. Banks lending money is a core financial activity because it involves mobilizing savings and providing credit to individuals, businesses, and governments.
3. Companies issuing bonds is another financial activity, as bonds are financial instruments used to raise capital from investors.
4. These activities facilitate the flow of funds between savers and borrowers, ensuring efficient allocation of resources in the economy.
5. Unlike agriculture, manufacturing, or mining, which produce tangible goods, the financial sector produces financial services and instruments.

Therefore, banks and bond markets are integral parts of the financial sector, supporting growth in all other sectors by providing necessary funding.

1. In a recession, demand, investment, and employment fall, so policymakers aim to stimulate economic activity.
2. Central banks usually lower policy interest rates to make borrowing cheaper for households and businesses.
3. Cheaper credit encourages firms to invest and consumers to spend, helping revive demand in the economy.
4. Lower interest rates also reduce the cost of servicing existing debt, easing financial pressure on borrowers.
5. By contrast, raising interest rates, cutting government spending, or increasing taxes would further reduce demand, worsening the recession.

1. Increase in direct taxes reduces disposable income, lowers demand, and is generally deflationary rather than inflationary.
2. Reduction in government expenditure contracts overall demand in the economy, also deflationary in effect.
3. Increase in import duties on luxury goods raises prices of those specific goods, but the impact is narrow and not broadly inflationary.
4. Increase in money supply without matching output growth creates excess demand relative to supply, leading to a general rise in prices across the economy.
5. This situation is the classic cause of demand-pull inflation, where too much money chases too few goods.

1. Price of a substitute increases → Consumers shift to the given good because the alternative has become costlier, so demand rises.
2. Price of a complement increases → Since complements are consumed together, demand for the good falls when its complement becomes more expensive.
3. The good is inferior and consumer income increases → Demand for inferior goods decreases as consumers switch to better-quality substitutes.
4. Its own price increases → Higher price discourages buyers, reducing demand rather than increasing it.

1. Fiscal stimulus refers to government measures aimed at boosting demand and economic activity.
2. The most common tools are increasing government spending or cutting taxes.
3. Higher spending injects money directly into the economy, creating jobs and demand.
4. Tax cuts leave households and businesses with more disposable income, encouraging consumption and investment.
5. Options like raising interest rates or reducing money supply are monetary policy, not fiscal stimulus.
6. Import tariffs protect industries but do not directly stimulate overall demand.