Questions and Answers
What is the primary function of the foreign exchange market?
To facilitate the exchange of one currency for another
What is the definition of an exchange rate according to the text?
The price of one currency in terms of another currency
What is the primary factor that determines a flexible exchange rate?
The market supply and demand of different currencies
What is a fixed exchange rate system?
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What is the relationship between the exchange rate and the demand for foreign exchange?
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What are some purposes for which foreign exchange is demanded, according to the text?
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