The purchasing power parity exchange rate between two currencies is the rate that: MCQ with Answer and Explanation

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The purchasing power parity exchange rate between two currencies is the rate that:

A. equalizes interest rates

B. equalizes trade balances

C. equalizes the prices of a basket of goods across countries

D. maximizes exports

Answer: Option C

Solution (By JKSSB Mock Tests)

The PPP exchange rate equalizes the price of a common basket of goods across countries.

This question belongs to: Economy GK Economy Set 1

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Question #1

The 'base effect' in inflation calculation means:

A. change in base year of the price index

B. effect of currency depreciation

C. effect of money supply

D. the influence of the previous year's price level on current inflation

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Correct Answer: Option D

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

This question belongs to: Economy GK Economy Set 1

Question #2

In the context of cost, Marginal Cost is defined as:

A. Variable cost divided by output

B. Fixed cost divided by output

C. Change in total cost due to production of one additional unit

D. Total cost divided by output

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Correct Answer: Option C

Explanation:
Marginal Cost (MC) is the addition to total cost when one more unit of output is produced. MC = ΔTC/ΔQ.

This question belongs to: Economy GK Economy Set 1

Question #3

The 'United Nations Sustainable Development Solutions Network' publishes which report?

A. Global Hunger Index

B. Global Competitiveness Report

C. Human Development Report

D. World Happiness Report

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Correct Answer: Option D

Explanation:
UN SDSN publishes World Happiness Report.

This question belongs to: Economy GK Economy Set 1

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