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Year 11 Exam  >  Year 11 Tests  >  Test: Foreign Exchange Rates - Year 11 MCQ

Test: Foreign Exchange Rates - Year 11 MCQ


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10 Questions MCQ Test - Test: Foreign Exchange Rates

Test: Foreign Exchange Rates for Year 11 2024 is part of Year 11 preparation. The Test: Foreign Exchange Rates questions and answers have been prepared according to the Year 11 exam syllabus.The Test: Foreign Exchange Rates MCQs are made for Year 11 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Foreign Exchange Rates below.
Solutions of Test: Foreign Exchange Rates questions in English are available as part of our course for Year 11 & Test: Foreign Exchange Rates solutions in Hindi for Year 11 course. Download more important topics, notes, lectures and mock test series for Year 11 Exam by signing up for free. Attempt Test: Foreign Exchange Rates | 10 questions in 20 minutes | Mock test for Year 11 preparation | Free important questions MCQ to study for Year 11 Exam | Download free PDF with solutions
Test: Foreign Exchange Rates - Question 1
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Which exchange rate system allows currencies to fluctuate based on market demand and supply?

Detailed Solution for Test: Foreign Exchange Rates - Question 1
In a floating exchange rate system, currency values are determined by market forces of supply and demand.
Test: Foreign Exchange Rates - Question 2
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What action does a Central Bank take to strengthen its currency under a fixed exchange rate system?

Detailed Solution for Test: Foreign Exchange Rates - Question 2
By buying its own currency, the Central Bank increases its demand, thus strengthening the currency's value.
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Test: Foreign Exchange Rates - Question 3
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How does an increase in UK interest rates affect the value of the Pound (£)?

Detailed Solution for Test: Foreign Exchange Rates - Question 3
Higher interest rates attract foreign investors, increasing demand for £ and thus its value.
Test: Foreign Exchange Rates - Question 4
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What economic factor can cause a country's currency to depreciate in a floating exchange rate system?
Detailed Solution for Test: Foreign Exchange Rates - Question 4
Higher inflation rates can decrease a currency's value as it makes exports less competitive.
Test: Foreign Exchange Rates - Question 5
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Which exchange rate system involves setting a fixed value for a country's currency relative to another?
Detailed Solution for Test: Foreign Exchange Rates - Question 5
Pegged exchange rates involve fixing a currency's value relative to another, often the US dollar.
Test: Foreign Exchange Rates - Question 6
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What term describes the adjustment of a fixed exchange rate to increase the value of a currency?
Detailed Solution for Test: Foreign Exchange Rates - Question 6
Revaluation occurs when a Central Bank increases the value of its currency under a fixed exchange rate system.
Test: Foreign Exchange Rates - Question 7
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How do changes in tastes and preferences globally affect a country's currency value?
Detailed Solution for Test: Foreign Exchange Rates - Question 7
Increased global demand for a country's exports can strengthen its currency due to increased demand for its currency.
Test: Foreign Exchange Rates - Question 8
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Which factor directly impacts a country's current account balance and consequently its currency value?
Detailed Solution for Test: Foreign Exchange Rates - Question 8
Net exports directly affect the demand and supply of a country's currency in the forex market.
Test: Foreign Exchange Rates - Question 9
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What role does speculation play in influencing exchange rates?
Detailed Solution for Test: Foreign Exchange Rates - Question 9
Speculation can lead to short-term fluctuations in exchange rates based on anticipated market movements.
Test: Foreign Exchange Rates - Question 10
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How does quantitative easing (QE) typically affect a country's currency in the forex market?
Detailed Solution for Test: Foreign Exchange Rates - Question 10
QE usually leads to currency depreciation as it increases the money supply, reducing its value relative to other currencies.
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