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Questions and Answers
Which of the following best defines an exchange rate?
Which of the following best defines an exchange rate?
- The rate at which one currency will be exchanged for another currency (correct)
- The rate at which a country determines the value of its currency
- The rate at which a currency is pegged to another currency
- The rate at which one country's currency is valued in relation to another currency
What does it mean when an interbank exchange rate is 131 Japanese yen to the United States dollar?
What does it mean when an interbank exchange rate is 131 Japanese yen to the United States dollar?
- 1 Japanese yen can be exchanged for 131 US dollars
- 131 Japanese yen can be exchanged for 1 Japanese dollar
- 1 US dollar can be exchanged for 131 Japanese yen (correct)
- 131 Japanese yen can be exchanged for 1 US dollar
What determines the exchange rate regime that will apply to a country's currency?
What determines the exchange rate regime that will apply to a country's currency?
- The government's decision (correct)
- The interbank exchange rate
- The value of the country's currency
- The economic literature
What does it mean when a currency is floating?
What does it mean when a currency is floating?
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Can governments impose limits and controls on exchange rates?
Can governments impose limits and controls on exchange rates?
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