Currency appreciation generally makes exports: MCQ with Answer and Explanation

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Currency appreciation generally makes exports:

A. unchanged

B. more expensive in foreign currency

C. cheaper

D. free from tariffs

Answer: Option B

Solution (By JKSSB Mock Tests)

When a currency appreciates, domestic goods become more expensive for foreign buyers, reducing exports.

This question belongs to: Economy GK Economy Set 1

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Practice More Economy Set 1 Questions

Question #1

The concept of 'Liquidity Trap' was introduced by:

A. John Maynard Keynes

B. Milton Friedman

C. David Ricardo

D. Adam Smith

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Correct Answer: Option A

Explanation:
Keynes introduced the concept of liquidity trap, a situation where interest rates are so low that people prefer to hold cash rather than invest in bonds, making monetary policy ineffective.

This question belongs to: Economy GK Economy Set 1

Question #2

Which of the following is an assumption of the Ricardian theory of comparative advantage?

A. Labour is the only factor of production and is immobile internationally

B. There are increasing returns to scale

C. Labour is the only factor of production and is mobile internationally

D. Capital is the only factor of production

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Correct Answer: Option A

Explanation:
Ricardo assumed a single factor (labour), constant returns, and international immobility of labour, while labour is mobile within a country.

This question belongs to: Economy GK Economy Set 1

Question #3

The 'base effect' in inflation refers to:

A. inflation measured against a low or high price level in the previous year

B. the effect of changing the base year of GDP

C. the effect of exchange rate on imports

D. the effect of money supply on prices

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Correct Answer: Option A

Explanation:
Base effect refers to the influence of the previous year's price level on the current inflation rate.

This question belongs to: Economy GK Economy Set 1

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