Q47. Foreign exchange refers to a. trade with other countries b. the currencies

Question

Q47. Foreign exchange refers to a. trade with other countries b. the currencies of other countries c. the goods and services of other countries d. the excess of exports over imports

Q48. Under a system of fixed exchange rates, excess demand for foreign currency at the official exchange rate would cause a. the exchange rate to rise b. the exchange rate to fall c. the government to buy foreign currency from the country's importers d. the government to sell foreign currency to the country's importers

Q49. A freely floating exchange rate exists when a. governments set pegs for the exchange rate but occasionally adjust them b. offshore banks determine the exchange rate c. supply and demand forces are allowed to determine the rate at which currencies are exchanged for each other d. governments use international reserves only to influence exchange rates

Q50. Floating exchange rates are determined by the a. forces of supply of and demand for currencies b. governments with a trade surplus c. governments with a trade deficit d. IMF under the Bretton Woods Agreement

Explanation / Answer

47. b. the currencies of other countries

48. c. the government to buy foreign currency from the country's importers . This is to maintain fixed exchange rate.

49. c. supply and demand forces are allowed to determine the rate at which currencies are exchanged for each other

50. a. forces of supply of and demand for currencies. Market determine exchange rate freely.

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