Currency Exchange Rate Quiz

What is an exchange rate regime?

• A system to manage a country's transportation system

• A system to manage a country's currency in the foreign exchange market

• A system to manage a country's stock market

• A system to manage a country's healthcare system

What is a floating exchange rate regime?

• Central bank buys and sells currency at a fixed price

• Central bank influences the exchange rate without having a specific target

• Central bank fixes the exchange rate to a specific value

• Central bank determines money supply and lets the exchange rate adjust freely

What is a fixed exchange rate system?

• Central bank buys and sells currency at a fixed price

• Government tries to maintain a constant currency value against a specific currency or good

• Central bank determines money supply and lets the exchange rate adjust freely

• Central bank influences the exchange rate without having a specific target

What is managed floating exchange rate regime?

• Central bank influences the exchange rate without having a specific target

• Central bank determines money supply and lets the exchange rate adjust freely

• Central bank fixes the exchange rate to a specific value

• Central bank buys and sells currency at a fixed price

What is an appreciation of the domestic currency?

• A decrease in the exchange rate

• A decrease in the price of the domestic currency in terms of a foreign currency

• An increase in the price of the domestic currency in terms of a foreign currency

• An increase in the exchange rate

What is a depreciation of the domestic currency?

• A decrease in the price of the domestic currency in terms of a foreign currency

• A decrease in the exchange rate

• An increase in the exchange rate

• An increase in the price of the domestic currency in terms of a foreign currency

What is devaluation in a fixed exchange rate system?

• A decrease in the exchange rate

• An increase in the exchange rate

• An increase in the price of the domestic currency in terms of a foreign currency

• A decrease in the price of the domestic currency in terms of a foreign currency

What is revaluation in a fixed exchange rate system?

• An increase in the price of the domestic currency in terms of a foreign currency

• A decrease in the exchange rate

• An increase in the exchange rate

• A decrease in the price of the domestic currency in terms of a foreign currency

What do economists believe is the best exchange rate regime?

• No specific regime is considered the best

• Managed floating exchange rate

• Fixed exchange rate

• Floating exchange rate

What is the central bank's role in a fixed exchange rate system?

• Allows the exchange rate to adjust freely according to market forces

• Remains committed to buy and sell its currency at a fixed price

• Determines money supply and lets the exchange rate adjust freely

• Influences the exchange rate without having a specific target