MCQs of Economics – Foreign Exchange

The most widely traded currency in the foreign exchange market is the:

The supply of foreign currency tends to be:

Suppose that a Swiss television set that costs 400 francs in Switzerland cost $200 in the United States. The exchange rate between the franc and the dollar is:

In the early eighties, the Federal Reserve pursed a tight monetary policy. All else being equal. the impact of that policy was to interest rates in the United States relative to those in Europe and cause the dollar to _____ against European currencies

Under a system of floating exchange rates the pound would depreciate in value if there occurs:

A depreciation of the dollar will have its most pronounced impact on imports if the demand for imports is:

During the era of dollar appreciation from 1981 to 1985 a main reason why the dollar did not fall in value was:

Which financial instrument provides a buyer the right to purchase or sell a fixed amount of currency at a prearranged price, within a few days to a couple of years:

The largest volume of foreign exchange trading takes place in:

Given the foreign currency market for the Swiss franc, the supply of franc slopes upward, because as the dollar price of the franc rises:

In a supply and demand diagram for Japanese yen, with the exchange rate in dollars per yen on the vertical axis, the demand schedule for yen is drawn sloping:

Suppose there occurs an increase in the Canadian demand for Japanese computers This results in a (an):

The exchange rate is kept the same across geographically separate markets by:

The reduction or covering of foreign exchange risk is called:

An important feature of a _____ is that the holder has the right but not the obligation to buy or sell currency:

The least common type of transaction in the foreign exchange is a:

If the bank is selling francs for $0.45, then what is the implied franc price of the dollar?

The difference between bid (buying) rates and ask (selling) rates is called the:

Riskless transactions to take advantage of profit opportunities due to a price differential or a yield differential in excess of transaction costs are called

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

The franc is said to be selling at a ____ if the spot dollar price is $0.48 and the nine month forward rate is $0.42

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

If Sweden’s currency depreciates relative to Norway’s currency

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

Which of the following is not a reason why Joe Smith (an American) might participate as a demander in the foreign exchange market?

____ represent the most widely used tool in relational finance for measuring the average value of a currency relative to a number of other currencies

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

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

The real effective exchange rate for the U.S dollar

A difference between forward and futures contracts is that:

Speculators in foreign exchange markets do all of the following except

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

All currencies other than the domestic currency of a given country are referred to as:

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

In 1971, most countries:

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

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:

Expansionary monetary policy:

A fiscal expansion in the UK.

The fall in value of one currency relative to another is:

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

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

Under a system of floating exchange rates there is a general tendency for:

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:

The J-curve effect refers to the observation that: