Exchange Rates Quiz by Shubhrata Shrestha | Jul 8, 2025 | 0 comments Exchange Rates Quiz 1. What does the real exchange rate take into account that the nominal rate does not? A. Interest rates B. Tax levels C. Inflation differences D. Trade volumes None 2. Which of the following is true about a fixed exchange rate system? A. It is determined by the forex market B. The central bank does not intervene C. It allows daily market fluctuations D. The currency is pegged and maintained by central bank intervention None 3. What happens during a revaluation of a fixed exchange rate? A. Imports become expensive B. Exports become cheaper C. Currency value increases D. Inflation rises due to imports None 4. Under what condition does the Marshall-Lerner condition state that depreciation will improve a trade balance? A. If the exchange rate is fixed B. If sum of price elasticities > 1 C. If central banks intervene D. If inflation is high None 5. Which of the following is a feature of a trade-weighted exchange rate? A. Based on one foreign currency B. Weights are based on GDP C. Reflects inflation-adjusted value D. Currencies are weighted based on trade importance None 6. A fall in the value of a currency in a floating exchange rate system is called: A. Revaluation B. Inflation C. Depreciation D. Devaluation None 7. What usually causes a J-curve effect after depreciation? A. Immediate changes in monetary policy B. Immediate drop in exports C. Short-term inelastic demand for imports and exports D. Rise in central bank reserves None 8. Which system combines elements of both fixed and floating rates? A. Currency union B. Dirty float C. Pure float D. Gold standard None 9. What is the primary tool to maintain a fixed exchange rate? A. Tax policy B. Interest rate ceilings C. Fiscal policy D. Foreign exchange market intervention None 10. Which of the following does not typically affect a floating exchange rate? A. Speculation B. Inflation C. Direct central bank control D. Interest rates None Time's up Submit a Comment Cancel replyYour email address will not be published.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
