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

Question
The 'Uncovered Interest Parity' condition states that:
A. expected exchange rate changes offset interest rate differentials
B. capital flows are zero
C. inflation rates are equal across countries
D. interest rates are equal across countries
Answer: Option A
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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Practice More Economy Set 1 Questions

Question #1
Which of the following is a feature of a flexible exchange rate system?
A. Exchange rate is determined by market forces of demand and supply of foreign exchange
B. Exchange rate is fixed by government decree
C. Complete absence of central bank intervention in all cases
D. No role for speculation
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Correct Answer: Option A

Explanation:
Under a pure flexible (floating) exchange rate system, the value of the currency is determined by the interaction of demand and supply in the foreign exchange market.
This question belongs to: Economy GK Economy Set 1
Question #2
Which of the following is a feature of a mixed economy?
A. Complete private ownership of resources
B. Coexistence of public and private sectors
C. Complete government ownership of resources
D. Absence of government intervention
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Correct Answer: Option B

Explanation:
A mixed economy is characterised by the coexistence of both public and private sectors, with government intervention to correct market failures.
This question belongs to: Economy GK Economy Set 1
Question #3
The 'Production Linked Incentive' scheme was first introduced for which sector in 2020?
A. Textiles
B. Mobile manufacturing and electronic components
C. Steel
D. Food processing
Discuss
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Correct Answer: Option B

Explanation:
PLI was first introduced for mobile manufacturing and electronic components in 2020.
This question belongs to: Economy GK Economy Set 1
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