Attempt this previous-year question. The correct option stays hidden until you choose.
With reference to the Indian economy, consider the following statements:
1. An increase in Nominal Effective Exchange Rate (NEER) indicates the appreciation of rupee.
2. An increase in the Real Effective Exchange Rate (REER) indicates an improvement in trade competitiveness.
3. An increasing trend in domestic inflation relative to inflation in other countries is likely to cause an increasing divergence between NEER and REER.
Which of the above statements are correct?
Pick an option to check yourself.
• Correct Answer: C
• Rising NEER indicates nominal rupee appreciation against a basket of currencies.
• Higher REER means real appreciation, hurting export competitiveness.
• Higher domestic inflation widens the inflation-adjusted gap between NEER and REER.
Attempt Prelims MCQs or open Mains questions by paper — then continue the same bank inside the app with visual decks.
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