The 'real interest rate' is approximately equal to: MCQ with Answer and Explanation

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The 'real interest rate' is approximately equal to:

A. inflation minus nominal interest rate

B. nominal interest rate minus inflation

C. nominal interest rate plus inflation

D. nominal interest rate divided by inflation

Answer: Option B

Solution (By JKSSB Mock Tests)

Real interest rate ≈ nominal interest rate - inflation rate.

This question belongs to: Economy GK Economy Set 1

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Question #1

The 'Goods and Services Tax' on bread is:

A. 18%

B. 12%

C. 0%

D. 5%

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Correct Answer: Option C

Explanation:
Bread is exempt from GST.

This question belongs to: Economy GK Economy Set 1

Question #2

The 'International Monetary Fund' Extended Fund Facility provides:

A. only technical assistance

B. medium-term support for structural balance of payments problems

C. grants to all countries

D. short-term loans

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Correct Answer: Option B

Explanation:
The Extended Fund Facility provides medium-term support for countries with structural BoP problems.

This question belongs to: Economy GK Economy Set 1

Question #3

In the context of behavioural finance, the 'Disposition Effect' refers to:

A. The tendency to sell losers and hold winners

B. Perfectly rational realisation of gains and losses

C. Only the effect of taxes on trading

D. The tendency of investors to sell winning investments too early and hold losing investments too long

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Correct Answer: Option D

Explanation:
The disposition effect is the empirical regularity that investors are more likely to realise gains than losses, consistent with prospect-theory value functions and the reluctance to admit mistakes.

This question belongs to: Economy GK Economy Set 1

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