Exchange Rates Quiz by Shubhrata Shrestha | Jun 2, 2025 | 0 comments Exchange Rates Quiz 1. What happens to a country's exports after a currency depreciation? A) They become more expensive B) They become cheaper C) They remain unchanged D) They are banned by law None 2. Which of the following would increase the demand for a country’s currency? A) Increase in imports B) Higher domestic interest rates C) Rise in inflation D) Lower confidence in economy None 3. A fall in exchange rate caused by market forces is known as: A) Devaluation B) Depreciation C) Appreciation D) Intervention None 4. Which statement about appreciation is TRUE? A) It reduces purchasing power B) It makes imports cheaper C) It increases export demand D) It increases domestic inflation None 5. The Marshall-Lerner Condition is satisfied when: A) Exports and imports are both inelastic B) Currency is fixed C) Elasticities of demand sum to less than 1 D) Elasticities of demand for exports and imports sum to more than 1 None 6. What is the likely short-run effect of depreciation on trade balance? A) Immediate improvement B) Worsening due to J-curve effect C) No effect D) Balanced immediately None 7. In AD/AS analysis, appreciation of currency typically: A) Shifts AD rightward B) Causes demand-pull inflation C) Shifts AD leftward D) Increases national income None 8. Real Effective Exchange Rate accounts for: A) Only bilateral exchange rates B) Inflation differentials and trade weights C) Stock market changes D) Gold reserves None 9. What effect does speculation of future appreciation have? A) Increases current demand for the currency B) Increases exports C) Increases inflation D) Reduces foreign investment None 10. A rightward shift in AD due to depreciation would lead to: A) Lower real GDP B) Lower employment C) Higher output and inflation D) Fiscal surplus None Time's up Submit a Comment Cancel replyYour email address will not be published. Required fields are marked *Comment * Name * Email * Website Save my name, email, and website in this browser for the next time I comment. Δ
