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1 | |
If the foreign exchange rate of the U.S. is 60 Bangladesh taka per dollar, the foreign exchange rate of Bangladesh is |
| | A) | 60 Bangladesh taka per dollar. |
| | B) | 60 dollars per Bangladesh taka. |
| | C) | 1 Bangladesh taka = 0.0167 dollars. |
| | D) | 1 Bangladesh taka = 0.5 dollars. |
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2 | |
The value of the euro against the dollar |
| | A) | declined after its introduction in 1999, but rose after 2003. |
| | B) | rose after its introduction in 1999, but declined after 2003. |
| | C) | declined steadily since its introduction in 1999. |
| | D) | rose steadily since its introduction in 1999. |
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3 | |
Which of the following is not a reason why an individual might participate as a demander in the foreign exchange market? |
| | A) | the desire to open a bank account in a foreign country |
| | B) | the desire to purchase a TV produced domestically |
| | C) | the desire to travel abroad |
| | D) | all of the above are reasons why an individual might participate as a demander in the foreign exchange market |
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4 | |
Which of the following is a source of a country's foreign exchange? |
| | A) | foreign currency speculation |
| | B) | exports to foreign countries |
| | C) | foreign country purchases of domestic country stocks |
| | D) | all of the above are sources of foreign exchange |
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5 | |
Which of the following sequences reflects an appreciation of the Iraqi dinar? |
| | A) | 1 dinar = 0.002 US$ ⇒ 1 dinar = 0.001 UD$ |
| | B) | 1 dinar = 0.001 US$ ⇒ 1 dinar = $0.002 US$ |
| | C) | 1 US$ = 1,400 dinars ⇒ 1 US$ = 1,500 dinar |
| | D) | a and b are both correct |
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6 | |
Suppose demand for Sri Lanka's principal export product, tea, decreases. Holding other factors constant, what will happen to Sri Lanka's exchange rate (the number of Sri Lankan rupees per dollar)? |
| | A) | it will increase in value (appreciate) |
| | B) | it will not change in value |
| | C) | it will decrease in value (depreciate) |
| | D) | any of the above are possible - not enough information is available |
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7 | |
The daily, or current, market for exchange is known as |
| | A) | the forward market |
| | B) | the cross-rate market. |
| | C) | nominal effective exchange market. |
| | D) | the spot market. |
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8 | |
If the U.S. consumer price index (CPI) is 120.72, the CPI for France is 112.37, and the nominal exchange rate is 1 US$ = 0.885 euros, the U.S. real exchange rate is |
| | A) | 1.21. |
| | B) | 0.82. |
| | C) | 0.95. |
| | D) | 1.05. |
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9 | |
If a beer costs 3 US$ in the U.S. and 6 pesos in Mexico, absolute purchasing power parity would imply that the exchange rate (in US$ per peso) is |
| | A) | 0.667. |
| | B) | 0.5. |
| | C) | 1.5. |
| | D) | 2.0. |
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10 | |
An agreement to buy or sell a specified quantity of foreign currency for delivery in three months at a given exchange rate is called |
| | A) | a spot contract. |
| | B) | a foreign currency option. |
| | C) | a futures contract. |
| | D) | an arbitrage contract. |
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