Mod 8 Quiz

spot rate

A company relies on an exchange rate that is based on trade for delivery within two business days. What type of exchange rate does the company use?

the markets.

A currency arrangement that is based on free floating exchange rates relies on

adopting the currency of another country.

A currency exchange arrangement with no separate legal tender is essentially

a debit in the current account.

A purchase of foreign goods in the United States (goods that were imported from another country) will be recorded in the BOP as

forward rate

A trader locked in a contract to purchase currencies at today's rates at a fixed future date. What exchange rate will the company use in these transactions?

profit shifting.

Along with using tax benefits to decrease their tax rates, companies might also employ two basic strategies: tax inversion and

purity and scarcity.

Historically, gold has been used as a way for people to store value because of its

vehicle currency.

Jalala works for a diamond importer. The company uses the U.S. dollar for international trade deals. In this instance, the U.S. dollar is acting as a(n)

spot rate

Jorge wants to lock in today's exchange rate because he is worried rates might skyrocket in the next few months. He wants to lock in this rate for the shipments he has due in the next 60 days. What type of rate is Jorge interested in?

trades are done electronically.

Most of the transactions in the foreign currency market are OTC which means that

after 1945 to 1971.

The Bretton Woods system was in place from

a national currency that is also a reserve currency runs a deficit.

The Triffin paradox refers to what occurs when

the accounts being double-entry, so they are always balanced.

The balance part of the BOP is explained by

the U.S. dollar.

The fixed exchange rates set up at Bretton Woods were based on gold and

VAT, income tax, and withholding tax.

The three major taxes governments use to generate revenue are

the efficient market approach, the fundamental approach, and the technical analysis.

Three of the main approaches to exchange rate forecasting are

They are largely unregulated.

What is a characteristic of the FX markets?

inflation.

When a country experiences a sustained increase in prices, it is feeling the effects of

are often above the free market rate.

When a government requires a permit to purchase foreign currency, the exchange rates

an indirect tax levied on passive income.

Withholding tax is described as