The 'fixed exchange rate system' requires the central bank to: MCQ with Answer and Explanation

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The 'fixed exchange rate system' requires the central bank to:

A. intervene to maintain the rate within a narrow band

B. float the currency

C. abolish foreign exchange reserves

D. let the exchange rate move freely

Answer: Option A

Solution (By JKSSB Mock Tests)

Under a fixed exchange rate, the central bank intervenes to maintain the currency value.

This question belongs to: Economy GK Economy Set 1

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Practice More Economy Set 1 Questions

Question #1

The term 'Capital Formation' refers to:

A. Increase in population

B. Increase in the stock of capital goods

C. Increase in consumption

D. Increase in money supply

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Correct Answer: Option B

Explanation:
Capital formation refers to the net addition to the existing stock of capital goods such as machinery, buildings and equipment in an economy.

This question belongs to: Economy GK Economy Set 1

Question #2

The 'Goods and Services Tax' rate on footwear above Rs 1,000 is:

A. 28%

B. 12%

C. 5%

D. 18%

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Correct Answer: Option D

Explanation:
Footwear above Rs 1,000 attracts 18% GST.

This question belongs to: Economy GK Economy Set 1

Question #3

If a country's current account is in deficit, its capital account must be in:

A. surplus or official reserves must fall

B. zero

C. deficit as well

D. equilibrium

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Correct Answer: Option A

Explanation:
A current account deficit must be financed by a capital account surplus or a drawdown of official reserves.

This question belongs to: Economy GK Economy Set 1

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