6.3 Foreign Exchange rates
2 hours ago
deanhoss
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16 QuestionsShow answers
  • Question 1
    30 seconds
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    Q.

    What is an exchange rate?

    answer choices

    The rate at which goods are exchanged between two countries

    The price of one nation's currency in terms of another's

    How many US dollars you can exchange for RMB at Travelex

    The price of goods in terms of a foreign currency

  • Question 2
    60 seconds
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    Q.

    According to the table, what is the Euro equivalent of 1 USD?

    answer choices

    1.32 Euros

    0.53 Euros

    .76 Euros

    1.59 Euros

  • Question 3
    30 seconds
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    Q.

    According to the table, what is the USD equivalent of 1 Australian?

    answer choices

    0.97 USD

    1.32 USD

    1.28 USD

    1.03 USD

  • Question 4
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    Q.

    How is an exchange rate determined in the money market?

    answer choices

    The forces of supply and demand

    Government/the Federal Reserve Bank

    Whatever sellers of goods are willing to take

    Investors decide the value of the currency they wish to invest

  • Question 5
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    Q.

    Why do changing exchange rates help one country and hurt the other?

    answer choices

    One side loses purchasing power and the other gains it

    Takes money away from one side and gives it to the other

    Causes war between the two countries

    One country's government introduces tariffs to protect local industries

  • Question 6
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    Q.

    What type of exchange rate system do most countries operate under?

    answer choices

    Flexible

    Floating

    Fictitious

    Fixed

  • Question 7
    30 seconds
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    Q.

    What is the difference between a fixed rate exchange system and a floating rate system?

    answer choices

    Government sets rate vs market sets rate

    Doesn't exist vs does exist

    Never changing vs always changing

    Currency never appreciates vs can appreciate

  • Question 8
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    Q.

    If the US $ were to appreciate in relation to the Euro, what effect would this have?

    answer choices

    European consumers would have more purchasing power in US

    US consumers can buy more European goods and services for fewer $$

    US consumers can buy more English goods and services for fewer $$

    European tourists to the US will spend more $$

  • Question 9
    30 seconds
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    Q.

    How does inflation rate affect currency value/exchange rate?

    answer choices

    Higher inflation leads to depreciating currency & vice versa

    Increasing inflation leads to more favourable exchange rates

    Higher inflation leads to currency appreciation

    Lower inflation leads to more favourable exchange rate

  • Question 10
    30 seconds
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    Q.

    If the Mexican Peso depreciates in relation to the Chinese Yuan, how is Mexico affected?

    answer choices

    Mexico has less purchasing power in Chinese currency

    Mexico benefits from increased purchasing power

    Mexico would have more Chinese investors

    They would be invaded by China

  • Question 11
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    Q.

    The currency exchange rate of the South African rand for the Botswana pula fell by 5.7% between August 2014 and August 2015. What would be the immediate effect of this?

    answer choices

    Botswana’s level of protection would fall.

    Botswana’s tourists travelling to South Africa would find it less expensive

    South Africa’s imports would be cheaper.

    South Africa’s tourists travelling to Botswana would receive more pula per rand

  • Question 12
    30 seconds
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    Q.

    What is likely to cause a rise in a country’s foreign exchange rate?

    answer choices

    a fall in its exports of goods and services

    a fall in its imports of goods and services

    a fall in its inflow of income

    a rise in its outflow of transfers

  • Question 13
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    Q.

    A developing country’s two major sources of income from international trade are fishing and tourism. If the country’s exchange rate depreciated, what is likely to happen?

    answer choices

    Imported goods would become cheaper for local people.

    The country would definitely become poorer.

    The price of fish sold as exports would become cheaper.

    Tourists to the country would be discouraged by higher prices.

  • Question 14
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    Q.

    When the US$ exchange rate falls it will usually

    answer choices

    help to reduce a US trade deficit.

    increase the foreign price of US exports.

    reduce the price of US imports.

    reduce US inflation

  • Question 15
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    Q.

    In 2009 the exchange rate of the Singapore dollar changed from 1.49 = 1 US dollar to 1.43 Singapore dollars = 1 US dollar.

    How would this affect the import prices and export prices for Singapore?

    answer choices

    decrease/decrease

    decrease/increase

    increase/decrease

    increase/increase

  • Question 16
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    Q.

    The US currently trades in oil with the UK. The discovery of new oil and gas deposits in the US will mean that its oil imports decrease and its oil exports increase.

    From the initial equilibrium point of X, which letter indicates the new equilibrium point for the US exchange rate?

    answer choices

    A

    B

    C

    D

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