Currency Exchange Rate Quiz

Currency Exchange Rate Quiz

11th Grade

16 Qs

quiz-placeholder

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Currency Exchange Rate Quiz

Currency Exchange Rate Quiz

Assessment

Quiz

Social Studies

11th Grade

Medium

Created by

Leanne Magree

Used 7+ times

FREE Resource

16 questions

Show all answers

1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

A currency exchange rate that changes accordingly to supply and demand without government intervention is referred to as a fixed exchange rate.

True

False

Answer explanation

A currency exchange rate that changes according to supply and demand without government intervention is called a floating exchange rate, not a fixed exchange rate. Therefore, the statement is false.

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

A depreciation of Country A's currency will occur when there is a decrease in Country A's demand for exports.

True

False

Answer explanation

A depreciation of Country A's currency occurs when demand for its exports decreases, leading to lower foreign currency inflows. Thus, the statement is True.

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

An appreciation of Country A's currency will occur when there is a cash/interest rate cut in Country A, relative to that of its trading partners.

True

False

Answer explanation

A cash/interest rate cut in Country A typically leads to a depreciation of its currency, as lower rates make investments in that country less attractive compared to others. Therefore, the statement is false.

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

An increase in demand for a currency will cause an appreciation in currency.

True

False

Answer explanation

True. An increase in demand for a currency means more people want to buy it, which raises its value relative to other currencies, leading to appreciation.

5.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

A decrease in supply of Country A’s currency will cause an appreciation of that currency.

True

False

Answer explanation

A decrease in the supply of Country A's currency means there are fewer units available. This scarcity leads to an increase in demand, causing the currency to appreciate. Therefore, the statement is true.

6.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

If Country A’s value of currency decreases over time then firms who rely on imported resources will experience higher costs of production.

True

False

Answer explanation

True. When Country A's currency value decreases, imported resources become more expensive, leading to higher production costs for firms that rely on these imports.

7.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

All of the following factors will lead to a depreciation of Country A’s currency: a recession in one of its trading partners, a decrease in interest rates for Country A.

True

False

Answer explanation

The statement is false because a recession in a trading partner may lead to a depreciation of Country A's currency, but a decrease in Country A's interest rates typically leads to depreciation, not both factors together.

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