The Real Effective Exchange Rate differs from NEER because REER: MCQ with Answer and Explanation

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The Real Effective Exchange Rate differs from NEER because REER:

A. includes only the US dollar

B. is always higher

C. ignores inflation

D. adjusts for relative price or inflation differences

Answer: Option D

Solution (By JKSSB Mock Tests)

REER is NEER adjusted for relative inflation differences.

This question belongs to: Economy GK Economy Set 1

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Question #1

The 'Goods and Services Tax' on advertising services is:

A. 5%

B. 28%

C. 18%

D. 12%

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Correct Answer: Option C

Explanation:
Advertising services attract 18% GST.

This question belongs to: Economy GK Economy Set 1

Question #2

Which of the following is a characteristic of the 'Endogenous Money' view?

A. The money supply is determined primarily by the demand for bank credit and accommodates itself to that demand

B. Banks play no role in money creation

C. Only the monetary base matters

D. The money supply is strictly controlled by the central bank through the monetary base

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Correct Answer: Option A

Explanation:
The endogenous-money approach argues that the quantity of money is determined by the demand for loans and the willingness of banks to extend credit, with the central bank mainly setting the price of reserves rather than the quantity of base money.

This question belongs to: Economy GK Economy Set 1

Question #3

The 'marginal propensity to consume' can never be greater than:

A. 2

B. infinity

C. 1

D. 0.5

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Correct Answer: Option C

Explanation:
MPC is the fraction of additional income consumed, so it ranges from 0 to 1.

This question belongs to: Economy GK Economy Set 1

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