Which of the following is a feature of the 'Fisher Effect'? MCQ with Answer and Explanation

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Which of the following is a feature of the 'Fisher Effect'?

A. Inflation has no effect on nominal rates

B. The nominal interest rate equals the real interest rate plus expected inflation

C. The real interest rate equals the nominal rate plus inflation

D. Nominal and real rates are always equal

Answer: Option B

Solution (By JKSSB Mock Tests)

The Fisher equation states that the nominal interest rate is approximately equal to the real interest rate plus the expected rate of inflation.

This question belongs to: Economy GK Economy Set 1

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Question #1

The 'spot market' in foreign exchange deals with:

A. immediate delivery of currencies

B. futures only

C. options only

D. future delivery of currencies

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Correct Answer: Option A

Explanation:
Spot foreign exchange transactions involve immediate delivery of currencies.

This question belongs to: Economy GK Economy Set 1

Question #2

The 'Goods and Services Tax' on religious pilgrimage tours is:

A. 12%

B. 5%

C. 0%

D. 18%

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Correct Answer: Option B

Explanation:
Religious pilgrimage tours attract 5% GST.

This question belongs to: Economy GK Economy Set 1

Question #3

The 'hyperinflation' is:

A. slow price rise

B. falling prices

C. stable prices

D. extremely rapid and uncontrolled price rise

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Correct Answer: Option D

Explanation:
Hyperinflation is extremely rapid and uncontrolled inflation.

This question belongs to: Economy GK Economy Set 1

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