21. The Japanese yen has increasingly become a regional transaction : 1401825
21. The Japanese yen has increasingly become a regional transaction currency in
a. Eastern Europe.
c. North America.
e. none of the above.
22. ________________ refers to the exchange of one country’s money for that of
a. Foreign reserve
b. Foreign dilution
c. Foreign exchange
d. Foreign float
e. Foreign control
23. One of the most fundamental determinants of the exchange rate is ______________
whereby the exchange rate between the currencies of two countries is in equilibrium
when it equates the prices of a basket of goods and services in both countries.
a. free float
b. free float (dirty)
c. managed float
d. purchasing power parity (PPP)
e. absolute cost advantage
24. The Big Mac Index is published by:
a. The Economist
b. Business Week
c. The Wall Street Journal
d. The New York Times
e. Fortune Magazine
25. Actual exchange rates can be very different from the expected rates forecasted by
economists. Many interrelated factors influence the value of a floating currency.
The three most important fundamental factors are the nation’s balance of payments
situation, world political events, and:
a. the world inflation rate.
b. the country’s currency value.
c. the nation’s inflation rate relative to its trading partners.
d. the tax structure of the nation.
e. the supply of gold that the nation holds.
26. Factors that might influence foreign exchange rates with respect to political factors
would include election year or leadership change and:
a. money supply.
b. balance of payments.
c. exchange rate control as imposed by a government.
d. size of the military.
e. amount of armed conflict in the world.
27. The problem with tight exchange controls is that often they promote a
a. black market
b. white market
c. flat market
d. slim market
e. regular market
28. Many countries attempt to maintain a lower value for their currency to encourage
a. black marketing
b. grey marketing
29. If payment on a transaction is to be made immediately, the purchaser has no choice
other than to buy foreign exchange on:
a. the spot market.
b. the forward market.
c. a hedge.
d. a future date invoice.
e. an exchange rate pass-through.
30. If payment for goods is to be made at some future date, the purchaser has the option
of buying foreign exchange on the ________________ for delivery at some future
a. black market
b. gray market
c. forward market
d. exchange rate pass-through market
e. commodities market