The Nominal Effective Exchange Rate is: MCQ with Answer and Explanation

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The Nominal Effective Exchange Rate is:

A. a trade-weighted average of the rupee against a basket of currencies

B. the difference between exports and imports

C. the rupee-dollar rate only

D. the inflation-adjusted exchange rate

Answer: Option A

Solution (By JKSSB Mock Tests)

NEER is a trade-weighted average of the domestic currency against a basket of foreign currencies.

This question belongs to: Economy GK Economy Set 1

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Question #1

In the context of growth theory, 'Semi-Endogenous Growth' models feature:

A. Only exogenous technological progress

B. Long-run growth that depends on population growth but not on policy parameters that affect the R&D share

C. Long-run growth that is fully endogenous to policy

D. No role for research and development

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Correct Answer: Option B

Explanation:
Semi-endogenous growth models retain diminishing returns to knowledge in the R&D sector, so that long-run growth is proportional to population growth and is not affected by the share of resources devoted to R&D.

This question belongs to: Economy GK Economy Set 1

Question #2

The 'Primary deficit' is a useful measure because it shows:

A. only capital deficit

B. only revenue deficit

C. the entire fiscal deficit

D. the deficit excluding interest payments

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Correct Answer: Option D

Explanation:
Primary deficit excludes interest payments from fiscal deficit.

This question belongs to: Economy GK Economy Set 1

Question #3

In the context of demand, a Giffen good is one for which:

A. Demand increases as price increases

B. Demand is independent of price

C. Demand is perfectly elastic

D. Demand decreases as price increases

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Correct Answer: Option A

Explanation:
A Giffen good is an inferior good for which the income effect outweighs the substitution effect, leading to an upward-sloping demand curve (demand rises when price rises).

This question belongs to: Economy GK Economy Set 1

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