The Marshall-Lerner condition states that devaluation improves the trade balance if: MCQ with Answer and Explanation

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The Marshall-Lerner condition states that devaluation improves the trade balance if:

A. import tariffs are raised

B. the sum of price elasticities of demand for exports and imports is greater than one

C. exports exceed imports

D. the sum is less than one

Answer: Option B

Solution (By JKSSB Mock Tests)

The Marshall-Lerner condition requires the sum of export and import demand elasticities to exceed one.

This question belongs to: Economy GK Economy Set 1

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Which of the following is a feature of the 'Random Walk Hypothesis' of stock prices?

A. Only fundamental analysis is irrelevant

B. Stock prices are predictable based on past patterns

C. Technical analysis can systematically generate excess returns

D. Successive price changes are independent and stock prices fully reflect available information

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Correct Answer: Option D

Explanation:
The random walk hypothesis, closely related to the efficient market hypothesis, asserts that successive price changes are independent and that prices incorporate information so rapidly that future changes are unpredictable.

This question belongs to: Economy GK Economy Set 1

Question #2

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The concept of 'Purchasing Power Parity' helps in:

A. Comparing real income and living standards across countries

B. Calculating domestic fiscal deficit

C. Determining only nominal exchange rates

D. Measuring only unemployment

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Correct Answer: Option A

Explanation:
PPP-based comparisons adjust for differences in price levels across countries, providing a better measure of real income and relative living standards.

This question belongs to: Economy GK Economy Set 1

Question #3

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The concept of 'Algorithmic Transparency' refers to:

A. Only human decision-making without algorithms

B. The degree to which the functioning, criteria and effects of algorithms used by platforms or public authorities can be understood and scrutinised

C. Only the source code of open-source software

D. The complete secrecy of all algorithms

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Correct Answer: Option B

Explanation:
Algorithmic transparency concerns the extent to which the logic, data and outcomes of algorithmic systems are open to inspection, explanation and accountability by users, regulators or the public.

This question belongs to: Economy GK Economy Set 1

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