Podcast
Questions and Answers
Which term refers to the increase in the value of a currency in a fixed exchange rate regime?
Which term refers to the increase in the value of a currency in a fixed exchange rate regime?
- Depreciation
- Revaluation (correct)
- Managed float
- Arbitrage
What is the main function of the Foreign Exchange Market?
What is the main function of the Foreign Exchange Market?
- To facilitate international currency trades (correct)
- To provide loans to international businesses
- To control the stock market fluctuations
- To regulate the exchange rate of a single currency
What does the demand for foreign exchange depend on?
What does the demand for foreign exchange depend on?
- The amount of gold reserves held by the central bank
- The unemployment rate in the domestic country
- Interest rates in the domestic country and abroad (correct)
- The level of GDP in the domestic country
Who are the participants in the Foreign Exchange Market?
Who are the participants in the Foreign Exchange Market?
What is a freely floating / flexible exchange rate regime?
What is a freely floating / flexible exchange rate regime?
What is the main characteristic of a managed float / hybrid exchange rate regime?
What is the main characteristic of a managed float / hybrid exchange rate regime?
What is the price of one dollar in terms of Ethiopian Birr?
What is the price of one dollar in terms of Ethiopian Birr?
Why do we need to exchange one currency for another?
Why do we need to exchange one currency for another?
If a dollar is worth 120 yen, how much does a US car costing $10k convert to in yen?
If a dollar is worth 120 yen, how much does a US car costing $10k convert to in yen?
How is the exchange rate defined in terms of domestic and foreign currency units?
How is the exchange rate defined in terms of domestic and foreign currency units?
Who are the major players in the forex market?
Who are the major players in the forex market?
In international trade, why do exchange rates play a central role?
In international trade, why do exchange rates play a central role?
What is the role of central banks in the forex market?
What is the role of central banks in the forex market?
How do corporations with operations in several countries use forex?
How do corporations with operations in several countries use forex?
What is the most common type of foreign exchange transactions?
What is the most common type of foreign exchange transactions?
What is the significance of expressing exchange rates in different ways?
What is the significance of expressing exchange rates in different ways?
The foreign exchange market is where international currency trades take place.
The foreign exchange market is where international currency trades take place.
In international transactions, people need to sell one currency and buy another.
In international transactions, people need to sell one currency and buy another.
The foreign exchange rate is the price of one currency in terms of another currency.
The foreign exchange rate is the price of one currency in terms of another currency.
A freely floating / flexible exchange rate regime is a system where the exchange rate is allowed to fluctuate according to the foreign exchange market forces.
A freely floating / flexible exchange rate regime is a system where the exchange rate is allowed to fluctuate according to the foreign exchange market forces.
The demand for and the supply of foreign exchange depend on various factors such as interest rates, inflation, and political stability.
The demand for and the supply of foreign exchange depend on various factors such as interest rates, inflation, and political stability.
Arbitrageurs, hedgers, and speculators play a role in the interaction within the foreign exchange market.
Arbitrageurs, hedgers, and speculators play a role in the interaction within the foreign exchange market.
Exchange rate can be expressed in terms of domestic currency units per unit of foreign currency and foreign currency units per unit of domestic currency.
Exchange rate can be expressed in terms of domestic currency units per unit of foreign currency and foreign currency units per unit of domestic currency.
An Ethiopian importer must sell birr and purchase dollars to buy American goods.
An Ethiopian importer must sell birr and purchase dollars to buy American goods.
Exchange rates play a central role in international trade because they allow us to compare the prices of goods and services produced in different countries.
Exchange rates play a central role in international trade because they allow us to compare the prices of goods and services produced in different countries.
If a dollar is worth 120 yen, the US car costing $10k converts to 1.2 mln yen.
If a dollar is worth 120 yen, the US car costing $10k converts to 1.2 mln yen.
Central banks sometimes intervene in foreign exchange markets and hold forex reserves that can affect the supply of and demand for currency.
Central banks sometimes intervene in foreign exchange markets and hold forex reserves that can affect the supply of and demand for currency.
Corporations with operations in several countries frequently make or receive payments in currencies other than that of their headquarters.
Corporations with operations in several countries frequently make or receive payments in currencies other than that of their headquarters.
The most common participants in foreign exchange transactions are individual retail investors.
The most common participants in foreign exchange transactions are individual retail investors.
When expressing an exchange rate in terms of foreign currency units per unit of domestic currency, the exchange rate is written as $0.019/1 birr.
When expressing an exchange rate in terms of foreign currency units per unit of domestic currency, the exchange rate is written as $0.019/1 birr.
Foreign exchange rates are only important for domestic trade and have no impact on international trade.
Foreign exchange rates are only important for domestic trade and have no impact on international trade.
If a currency's value increases in a fixed exchange rate regime, it is known as devaluation.
If a currency's value increases in a fixed exchange rate regime, it is known as devaluation.
