Economics MCQs

Page No. 205

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


aa weakening of a currency


b A depreciation of a currency


cAn appreciation of a currency


da debasement of a currency



A fiscal expansion in the UK ?


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


bdoes not affect the price of the pound sterling


ctends to appreciate the pound sterling


dtends to depreciate the pound sterling



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


afloating exchange rates


bpegged exchange rates


cmanaged exchange rates


dfixed exchange rates



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


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


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


dThat prohibited governments from intervening in the foreign exchange markets



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


aexchange rate


b balance of trade


c terms of trade


d currency valuation


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


bfutures contracts have negotiable delivery dates


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


dfutures contracts involve no brokerage fees or other transactions costs



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


adestabilizing


bstabilizing


cinflationary


ddeflationary


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


b $0.1002


c$0.2826


d$1.1024


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


bsell; depreciation


c buy; depreciation


d buy; appreciation


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


bspot contract


cmoney contract


dbid contract


View Answer forward contract

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