Daily Current Affairs Quiz: October 24, 2025

Answer: B [1, 2 and 4 only]
Explanation:

Statement 1 is correct: Moderate inflation indicates healthy economic activity. It shows that demand for goods and services is rising, encouraging production, investment, and employment. Gradual price increases help sustain economic growth without significantly eroding purchasing power.

Statement 2 is correct: High inflation destabilizes the economy by reducing the real value of money. It discourages savings and long-term investment, increases uncertainty, and can lead to economic problems like stagflation, thereby harming growth and financial stability.

Statement 3 is incorrect: Deflation is not always beneficial. Falling prices may signal weak demand, reduce production, lead to layoffs, and lower wages. Prolonged deflation can cause economic stagnation and reduce consumer spending, negatively impacting growth.

Statement 4 is correct: Central banks aim to maintain inflation within a target range to ensure price stability. Controlled inflation fosters investment, consumption, and sustainable economic growth by providing predictability in the economy.

Answer: A [CBDCs are issued and regulated by a central authority.]
Explanation:

CBDCs are digital forms of fiat currencies issued and regulated by the central bank of a country, which is the key feature that distinguishes them from decentralized cryptocurrencies like Bitcoin.

Answer: C [Fiscal policy is concerned with government revenue and expenditure, while monetary policy deals with the supply of money and interest rates.]
Explanation:

Fiscal policy refers to the use of government spending and tax policies to influence economic conditions, including demand for goods and services, employment, and inflation. Monetary policy, on the other hand, involves managing the economy by altering the supply of money and interest rates. It is primarily conducted by the central bank of a country.

Answer: D [1 and 3 only]
Explanation:

Statement 1 is correct: During a depression, the velocity of money tends to decrease significantly. People hoard cash due to uncertainty and pessimism about the future, reducing the rate at which money circulates in the economy.

Statement 2 is incorrect: Declines in capacity utilization are a hallmark of depressions. As demand falls, businesses operate below their potential output, leading to idle factories and equipment.

Statement 3 is correct: Sharply rising inflation is not typical during depressions. Deflation or very low inflation is more common as demand plummets.

Statement 4 is incorrect: Debt deflation is a common feature of depressions. Falling prices increase the real burden of debt, leading to defaults, bankruptcies, and further economic contraction.

Answer: A [Medium of exchange, measure of value, store of value, standard of deferred payment]
Explanation:

Money serves several important functions in an economy, including as a medium of exchange, which facilitates the buying and selling of goods; as a measure of value, which allows the value of different goods and services to be compared; as a store of value, which allows wealth to be saved and retrieved in the future; and as a standard of deferred payment, which enables borrowing and lending. Therefore, option A is the correct answer.