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Foreign Exchange

If a nation’s interest rates are relatively low compared to those of other countries then the exchange value of its currency will tend to ?

Economics Mcqs, Foreign Exchange /
If a nation’s interest rates are relatively low compared to those of other countries then the exchange value of its currency will tend to ?

A. depreciate under a system of fixed exchange rates
B. depreciate under a system of floating exchange rates
C. appreciate under a system of floating exchange rates
D. appreciate under a system of floating fixed rates

If a nation’s interest rates are relatively low compared to those of other countries then the exchange value of its currency will tend to ? Read More »

Economics Mcqs, Foreign Exchange

The theory of international exchange that holds that exchange rates adjust to offset differences in countries inflation rates in the ?

Economics Mcqs, Foreign Exchange /
The theory of international exchange that holds that exchange rates adjust to offset differences in countries inflation rates in the ?

A. price feedback theory
B. trade feedback theory
C. J-curve theory
D. purchasing power parity theory

The theory of international exchange that holds that exchange rates adjust to offset differences in countries inflation rates in the ? Read More »

Economics Mcqs, Foreign Exchange

If the Bank of England reduces the money supply to reduce inflation a floating exchange rate will aid the Bank of England in fighting inflation because ?

Economics Mcqs, Foreign Exchange /
If the Bank of England reduces the money supply to reduce inflation a floating exchange rate will aid the Bank of England in fighting inflation because ?

A. as the money supply is decreased the interest rate will increase and the price of UK exports will rise and the Price of UK imports will fall
B. as the money supply is decreased the interest rate will increase, and the price of UK exports will fall and the price of UK imports will rise
C. as the money supply is decreased the interest rate will increase and the price of UK exports and UK imports will fall.
D. as the money supply is decreased the interest rate will increase and the price of both UK exports and UK imports will rise

If the Bank of England reduces the money supply to reduce inflation a floating exchange rate will aid the Bank of England in fighting inflation because ? Read More »

Economics Mcqs, Foreign Exchange

Speculators in foreign exchange markets do all of the following except ?

Economics Mcqs, Foreign Exchange /
Speculators in foreign exchange markets do all of the following except ?

A. attempt to profit by trading on expectations about future currency prices
B. bear risk as they attempt to ____ beat the market||
C. attempt to buy currency at a low price and later resell that currency at a higher price
D. Simultaneously buy a currency at a low price and sell that currency at a higher price, making a riskless profit

Speculators in foreign exchange markets do all of the following except ? Read More »

Economics Mcqs, Foreign Exchange

The real effective exchange rate for the U.S dollar ?

Economics Mcqs, Foreign Exchange /
The real effective exchange rate for the U.S dollar ?

A. reflects only the influences of merchandise or real trade on the dollar’s exchange value
B. reflects only transactions in the currency futures market
C. is the weighted average of the dollar exchange rate relative to the currencies of important U.S trading partners adjusted for inflation?
D. is the weighted average of the dollar exchange rate relative to the currencies of important U.S trading partners unadjusted for inflation?

The real effective exchange rate for the U.S dollar ? Read More »

Economics Mcqs, Foreign Exchange

Investor engage in _____ when they move funds into foreign currencies in order to take advantage to interest rates abroad that are higher than domestic interest rates ?

Economics Mcqs, Foreign Exchange /
Investor engage in _____ when they move funds into foreign currencies in order to take advantage to interest rates abroad that are higher than domestic interest rates ?

A. currency arbitrage
B. interest arbitrage
C. short positions
D. long positions

Investor engage in _____ when they move funds into foreign currencies in order to take advantage to interest rates abroad that are higher than domestic interest rates ? Read More »

Economics Mcqs, Foreign Exchange