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How does the Real Effective Exchange Rate (REER) affect India’s export competitiveness?
  • a)
    It decreases the cost of imports
  • b)
    It indicates an undervaluation of the currency
  • c)
    A higher REER suggests an overvaluation of the currency
  • d)
    It has no impact on trade relations
Correct answer is option 'C'. Can you explain this answer?
Verified Answer
How does the Real Effective Exchange Rate (REER) affect India’s export...
A higher Real Effective Exchange Rate (REER) indicates that the currency is overvalued. This situation can negatively impact export competitiveness because Indian goods become more expensive for foreign buyers, leading to a potential decrease in exports. Conversely, overvaluation can make imports cheaper, which could lead to a trade imbalance. Monitoring the REER is crucial for maintaining a balanced trade environment, as fluctuations can significantly influence economic performance. Understanding REER is essential for policymakers to make informed decisions regarding trade and currency valuation.
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How does the Real Effective Exchange Rate (REER) affect India’s export competitiveness?a) It decreases the cost of importsb) It indicates an undervaluation of the currencyc) A higher REER suggests an overvaluation of the currencyd) It has no impact on trade relationsCorrect answer is option 'C'. Can you explain this answer?
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How does the Real Effective Exchange Rate (REER) affect India’s export competitiveness?a) It decreases the cost of importsb) It indicates an undervaluation of the currencyc) A higher REER suggests an overvaluation of the currencyd) It has no impact on trade relationsCorrect answer is option 'C'. Can you explain this answer? for Bank Exams 2025 is part of Bank Exams preparation. The Question and answers have been prepared according to the Bank Exams exam syllabus. Information about How does the Real Effective Exchange Rate (REER) affect India’s export competitiveness?a) It decreases the cost of importsb) It indicates an undervaluation of the currencyc) A higher REER suggests an overvaluation of the currencyd) It has no impact on trade relationsCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for Bank Exams 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for How does the Real Effective Exchange Rate (REER) affect India’s export competitiveness?a) It decreases the cost of importsb) It indicates an undervaluation of the currencyc) A higher REER suggests an overvaluation of the currencyd) It has no impact on trade relationsCorrect answer is option 'C'. Can you explain this answer?.
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