Podcast
Questions and Answers
What is the primary purpose of a fixed exchange rate regime?
What is the primary purpose of a fixed exchange rate regime?
- To promote trade in backward and underdeveloped countries
- To promote international investment
- To eliminate exchange control
- To provide stability and predictability for international trade and investment (correct)
What happens to a currency when there is more demand for it in the foreign exchange market?
What happens to a currency when there is more demand for it in the foreign exchange market?
- It remains unchanged
- It becomes fixed
- It appreciates (correct)
- It depreciates
What is a benefit of the euro's stability?
What is a benefit of the euro's stability?
- Reassurance for investors and stability in financial markets (correct)
- Increased competitiveness for European exports
- Increased volatility in currency markets
- Reduced financial market influence
What is a characteristic of a floating exchange rate regime?
What is a characteristic of a floating exchange rate regime?
What is a potential drawback of a floating exchange rate regime?
What is a potential drawback of a floating exchange rate regime?
What is the term for a currency increasing in value relative to other currencies?
What is the term for a currency increasing in value relative to other currencies?
What is the impact of a strong euro on European exports?
What is the impact of a strong euro on European exports?
What is the purpose of a government intervening in the foreign exchange market in a fixed exchange rate regime?
What is the purpose of a government intervening in the foreign exchange market in a fixed exchange rate regime?
What is the term for a currency decreasing in value relative to other currencies?
What is the term for a currency decreasing in value relative to other currencies?
What is the impact of changes in the euro on global financial markets?
What is the impact of changes in the euro on global financial markets?
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