Answer: C

Explanation:

There is a tradeoff between inflation and unemployment. Usually, when an economy goes through a period of high inflation, it is likely that the unemployment rate will go down. This is because lured by higher prices, companies try to increase production by hiring more people. Hence, statement 1 is correct.

RBI controls interest rates through monetary policy. When RBI raises interest rates, it makes borrowing expensive. This leaves companies and consumers with less money to spend, which lowers the inflation rate. Hence, statement 2 is correct.

Answer: C

Explanation:

The Phillips curve is an economic concept according to which inflation and unemployment have a constant and inverse relationship.

Stagflation is an economic scenario where an economy faces both high inflation and low growth (and high unemployment) at the same time. Hence, statements 1 and 2 both are correct.

Answer: B

Explanation:

Currency note coins are also called paper currency or legal paper because any kind of transaction cannot be rejected by any citizen of the country. Every currency note carries a promise by the Reserve Bank of India. If someone presents a note to the Reserve Bank of India or a commercial bank, the Reserve Bank of India is liable to provide purchasing power equal to the face value of that note.

Hence option (b) is correct.

Answer: B

Explanation:

Currency notes in India are issued by the Reserve Bank of India, which is the monetary authority of India, but coins are issued by the Government of India. Hence, statement 1 is incorrect.

Savings accounts and current accounts opened by people in commercial banks are called money in the modern economy because checks drawn from these accounts are used for transactions. A check drawn on savings account or current account can be dishonored by anyone, hence it is not legal tender.

Hence, statement 2 is correct.

Answer: B

Explanation:

It is the international currency in which the most trust is shown and every economy needs it. The strongest currency in the world is the one which has a high degree of liquidity, i.e. people are easily ready to sell or buy it because of the high confidence shown in it. Hence, option (b) is correct.