The 'Uncovered Interest Parity' condition states that: MCQ with Answer and Explanation

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The 'Uncovered Interest Parity' condition states that:

A. inflation rates are equal across countries

B. capital flows are zero

C. interest rates are equal across countries

D. expected exchange rate changes offset interest rate differentials

Answer: Option D

Solution (By JKSSB Mock Tests)

Uncovered interest parity says the expected exchange rate change equals the interest rate differential.

This question belongs to: Economy GK Economy Set 1

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Question #1

In the context of monetary policy implementation, the 'Corridor System' refers to:

A. The absence of any standing facilities

B. Only the range of inflation targets

C. Only the range of fiscal targets

D. The arrangement in which the policy rate is kept within a standing-facility corridor defined by the lending and deposit rates of the central bank

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Correct Answer: Option D

Explanation:
In a corridor system the central bank’s overnight lending rate and deposit rate form a corridor within which the interbank rate fluctuates; open-market operations keep the market rate near the centre of the corridor.

This question belongs to: Economy GK Economy Set 1

Question #2

A mutual fund pools money from investors to invest in:

A. only government bonds

B. only real estate

C. a diversified portfolio of securities

D. only fixed deposits

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Correct Answer: Option C

Explanation:
A mutual fund invests pooled investor funds in a diversified portfolio of securities.

This question belongs to: Economy GK Economy Set 1

Question #3

The 'GST' regime has subsumed which of the following central taxes?

A. Corporate tax

B. Customs duty

C. Central Excise Duty

D. Income tax

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Correct Answer: Option C

Explanation:
GST subsumed central excise duty, service tax, additional customs duty, etc.

This question belongs to: Economy GK Economy Set 1

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