Economics MCQs

Page No. 205

The rise in value of one currency relative to another is ?


aa weakening of a currency

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b A depreciation of a currency

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cAn appreciation of a currency

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da debasement of a currency

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A fiscal expansion in the UK ?


ahas no predictable effect on the price of the pound sterling?

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bdoes not affect the price of the pound sterling

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ctends to appreciate the pound sterling

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dtends to depreciate the pound sterling

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Exchange rates that are determined by the unregulated forces of supply and demand are ?


afloating exchange rates

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bpegged exchange rates

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cmanaged exchange rates

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dfixed exchange rates

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The agreements that were reached at the Bretton Woods conferences in 1944 established a system ?


aof essentially fixed exchange rates under which each country agreed to intervene in the foreign exchange market when necessary to maintain the agreed upon value of its currency

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bin which the value of currencies was fixed in terms of a specific number of ounces of gold, which in turn determined their values in international trading

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cof floating exchange rates determined of the supply and demand of one nation’s currency relative to the currency of other nations

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dThat prohibited governments from intervening in the foreign exchange markets

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The price of one country’s currency in terms of another country’s currency is the ?


aexchange rate

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b balance of trade

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c terms of trade

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d currency valuation

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View Answer exchange rate

A difference between forward and futures contracts is that ?


a forward contracts occur in a specific locations-for example, the Chicago Mercantile Exchange

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bfutures contracts have negotiable delivery dates

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c forward contracts can be tailored in amount and delivery date to the need of importers of exporters

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dfutures contracts involve no brokerage fees or other transactions costs

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Currency speculation is _____ if speculators bet against market forces that cause exchange fluctuations, thus moderating such fluctuations ?


adestabilizing

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bstabilizing

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cinflationary

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ddeflationary

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View Answer stabilizing

If the exchange rate is 11 Mexican pesos per U.S dollar, then it takes _______ to buy 1 peso?


a $0.0909

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b $0.1002

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c$0.2826

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d$1.1024

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View Answer $0.0909

Suppose that Boeing is to receive payment in euros in 6 month and wants to engage in hedging the firm would _______ euros on the 6-month forward market in order to protect itself from a/an of the euro?


a sell; appreciation

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bsell; depreciation

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c buy; depreciation

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d buy; appreciation

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View Answer sell; depreciation

The essential feature of a _______ is that it immediately fixed the rate at which a specified amount of one currency is to be delivered in exchange for a specific amount of another at a future date ?


aforward contract

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bspot contract

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cmoney contract

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dbid contract

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View Answer forward contract

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