Solved by verified expert :11. Which of the following is NOT a function of the
interbank operations of the foreign exchange market?
a. Provides a bank with a continuous stream of
information on conditions in the foreign exchange market.
b. Provides a bank the means to readjust its own
position quickly and at low cost.
c. Permits a bank to take on a position in a foreign
currency quickly.
d. Provides a bank with technological resources for
use in foreign exchange trading.
12. Under the managed float system of exchange rates, a
fall in the market price of a currency is called:
a. Devaluation.
b. Depreciation.
c. Appreciation.
d. Both (a) and (b).
13. Interbank trading is conducted directly between
__________ or through the use of __________ that provide anonymity until the
trade is complete and reduce search costs.
a. Traders; brokers
b. Brokers; traders
c. Individual consumers; the government
d. Individual consumers; brokers
14. A country’s demand for foreign currency is derived
from:
a. International transactions entering the debit
column of its balance of payments accounts.
b. International transactions entering the surplus
column of its balance of payments accounts.
c. The country’s demand for currency to finance
exports and capital inflows.
d. The country’s demand for currency to finance its
government’s compensating transactions.
15. U.S. exports of goods and services will create
a __________ foreign currency and a __________ U.S.dollars.
a. Demand for; supply of
b. Supply of; demand for
c. Shortage of; demand for
d. Supply of; shortage of
16. U.S. imports of goods and services will create
a __________ foreign currency and a __________ U.S.dollars.
a. Demand for; supply of
b. Supply of; demand for
c. Shortage of; demand for
d. Supply of; shortage of
17. U.S. capital inflows will create a __________
foreign currency and a __________ U.S. dollars.
a. Demand for; supply of
b. Supply of; demand for
c. Shortage of; demand for
d. Supply of; shortage of
18. In a __________ exchange rate system there is no
intervention by the government or central bankers.
a. Fixed
b. Pegged
c. Floating
d. Managed float
19. As the value of the yen falls relative to the U.S.
dollar:
a. Japanese goods become more expensive to U.S. consumers.
b. The supply of dollars will fall.
c. The demand for yen will rise.
d. U.S. goods become less expensive to Japanese
consumers.
20. The demand curve for foreign currency slopes
downward because as the exchange rate __________ the quantity demanded
__________.
a. Increases; decreases
b. Increases; increases
c. Decreases; decreases
d. Decreases; stays fixed
