EC-100

governments participate in the foreign exchange market through their a. central banks b. elected representatives c. judicial systems d. stock markets

Central banks

in the exchange rate quotation USD / EUR = 0.73, USD is the ____ currency a. quote b. base c. pegged d. Counter

base

and exchange rate quotation that uses domestic currency as the base currency is known as a(n) ___ quotation a. indirect b. Home c. free-floating d. Direct

direct

almost every major economy in the world has ____ currency a. strong b. pegged c. free-floating d. counter

free-floating

which of the following economic factor strengthens currency value: a. high interest rates b. increased inflation c. A trade deficit d. high government debt

high interest rates

which of the following is an advantage of a week dollar: a. it encourages exports b. employee wages go up c. more jobs are created d. increase more consumer spending

it encourages exports

which of the following is a true statement about the foreign exchange market: a. it is open three days a week b. is the worlds second largest financial market c. it operates only within the United States d. it is a decentralized market

it is a Decentralized market

what tends to occur when a country is experiencing political instability? a. commodity trade increases b. domestic trade improves c. it's currency loses value d. unemployment rates decrease

it's currently loses value

developing country sets it's currency to be the same value as the US dollar. This is called a(n) a. pegged currency b. indirect exchange rate quotation c. free-floating currency d. Direct exchange rate quotation

pegged currency

The value of a currency in a foreign exchange rate system is determined by a. supply and demand b. The world economic commission c. International banks d. previous exchange rate data

supply and demand

in the exchange rate quotation GBP / JPY = 171.93, JPY is the ____ currency a. strong b. base c. quote d. free-floating

quote

which of the following is a reason for pegging currency: a. to weaken in another country's currency b. to impede trade c. to stabilize currency d. To "let The market decide"

to stabilize currency

forwards and options are types of a. interbank markets b. Exchange rate quotations c. trading instruments d. counter currencies

trading Instruments

an exchange rate indicates one currency's value in relation to a. another currency b. it's value from a year ago c. an average of all world currencies d. the US dollar

another currency

The biggest traders of currency on the foreign exchange market are a. commercial and investment banks b. governments c. individuals d. businesses and corporations

commercial and investment banks

if a country exports more than imports, the demand for the country's currency will likely a. decrease b. stabilize overtime c. remain the same d. increase

Increase

which of the following is a political influence that can affect currency value: a. tax increase or cuts b. change in executive leadership c. overall attitude toward the market d. Low levels of inflation

change in executive leadership

in a floating exchange rate system, currency values are determined by a. A corporations business strategies b. a nations import quotas c. changes in supply and demand d. The world trade Federation

changes in supply and demand

What is the benefit to the united states if the value of the US dollars weaker than other world currencies? a. exports increase b. The trade deficit increases c. imports are cheaper d. trade balances are equal

exports increase

pegged currency is also known as ___ currency a. fixed b. free-floating c. weak d. risky

fixed

A country with an established, steady economy is most likely to use a ____ exchange rate a. pegged b. floating c. fixed d. perfect

floating

which of the following is an advantage of strong currency: a. it makes exports more expensive for foreign consumers b. it makes domestic businesses more attractive to foreign investors c. it raises the cost of living d. it boosts consumer confidence

it boosts consumer confidence

which of the following is an advantage of weak currency: a. it improves global perception of the domestic economy b. it inhibits business expansion in the foreign markets c. it boosts exports d. it makes buying imports cheaper

it boosts exports

which the following is a disadvantage of weak currency: a. it reduces business profits b. it makes buying imports less expensive c. it makes acquiring foreign companies more expensive d. it negatively effects the balance of trade

it makes acquiring foreign companies more expensive

which of the following factors is most likely to cause a country's currency value to fall: a. standards b. fewer exports c. decentralization d. rapid inflation

rapid inflation

when an unsettling international event occurs, it can cause traders to feel fearful and by only currencies that are considered strong and stable. These currencies are often called a. futures b. safe Havens c. spots d. base currencies

safe Havens

corporations participate in the foreign exchange market so that they can a. achieve economic goals for the nation b. complete transactions with foreign businesses smoothly c. purchase securities for their clients d. make a profit from currency speculation

complete transactions with foreign businesses smoothly

A nations currency exchange rate is likely to increase when a. stock values fluctuate b. an economic contraction occurs c. A labor force shrinks d. consumer confidence is high

consumer confidence is high

currency speculation is risky because a. predicting currency values is relatively easy b. it can be extremely profitable c. it can lead to high inflation d. it is a practice very few traders participate in

it can lead to high inflation

which of the following is a disadvantage of strong currency: a. it attracts foreign travelers b. it creates a drop in export sales c. it makes imports cheaper d. it lowers global opinion of the domestic economy

it creates a drop in export sales