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 t

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Q: 2 (IAS/2022)
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 ?
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question_subject: 

Economics

question_exam: 

IAS

stats: 

0,355,482,119,228,355,135

keywords: 

{'nominal effective exchange rate': [0, 0, 0, 1], 'real effective exchange rate': [0, 0, 0, 1], 'domestic inflation': [0, 0, 0, 1], 'indian economy': [0, 3, 3, 5], 'inflation': [0, 1, 0, 3], 'neer': [0, 0, 0, 1], 'reer': [0, 0, 0, 1], 'trade competitiveness': [0, 0, 0, 1], 'rupee': [1, 0, 1, 0], 'increase': [3, 1, 10, 35], 'trend': [0, 2, 1, 2], 'improvement': [1, 1, 0, 4]}

 

Preparing for Future Exams: Learning from the Analysis of Past Questions

Topics:

  • Nominal Effective Exchange Rate (NEER)
  • Real Effective Exchange Rate (REER)
  • Indian economy
  • Inflation

Sources:

  • "Foreign Exchange Market" chapter in the NCERT Economics textbook for Class XII: This chapter provides an overview of the foreign exchange market, exchange rate determination, and exchange rate regimes.
  • Reserve Bank of India (RBI) website: The RBI website provides data and analysis related to exchange rates and the Indian economy.
  • "International Finance" by Maurice D. Levi: This book provides a comprehensive overview of international finance, including exchange rates and their determinants.

Related topics:

  • Balance of payments
  • Trade competitiveness
  • Exchange rate regimes
  • Macroeconomic policies and their impact on the economy.