does it have 2 wheel drive?

No, it will be rear wheel drive if you have 4WD turned off.

Our 1995 Grand Cherokee was full time 4WD.  They do make them like that.  

if you have buttons that say 4wdhi 4wdlo 2wd and so on then yes it can be turned on 2wd if you do not have the buttons in your jeep then it is strictly 4wd... check the owners manual... if you dont have an owners manual you could always jot down the vin # and take it to a jeep dealer and they can tell you exactly how that specific suv rolled off the line...

Where your 4WD lever is, there will be a 2WD option at the top, closest end to the dash, if it's not there, then it is AWD. Also, at the end that's closest to the driver, if it says Qudra-trac, then it's all time 4WD, but if it's the Selec-trac it has the 2WD option.

The picture I'm including is the Selec-trac which has the 2WD option.

if you have a v8, your transfer case is All Wheel drive.
basically its rear wheel drive until the rear slips, then the front kicks in.
you can swap to a 2wd transfer case, but it wont give you any better gas mileage, since the transfer case you have is mostly 2wd until 4wd is needed.

Some grand cherokees(even the 6cyl) have 4wd all the time. if there is no 2wd indicator then you just have 4high and 4Lo.

It depends on which transfer case you have. I'm assuming you have a V8 in it...it's the np249~?.. You can always do a t-case swap and put in a 231 or a 242 to fix that problem. Or you can just pull your front driveshaft out :)