How do changes in income levels affect the demand for foreign products?

If Rush's income increases, his demand for foreign products will increase.

What is the impact of interest rate changes on the forex market?

Interest rate increase leads to currency appreciation

Imran is studying the foreign exchange market and notices that the Euro is appreciating in value. What does this mean for the Euro in the foreign exchange market?

It becomes more expensive in the foreign exchange market

What happens when a currency depreciates in value?

It becomes less expensive in the foreign exchange market

Who makes up the demand for Japanese Yen in the foreign exchange market when a U.S. business owner wants to import goods from Japan?

Importers like Rush who need to convert their currency (USD) into the currency of the exporter (JPY)

Who makes up the supply of a currency in the foreign exchange market?

Currency suppliers such as banks and individuals

What happens if there is a rightward shift in the demand curve for the currency Xuan, Dustin, and Dev are trading?

The demand for the currency they are trading has increased

What happens if there is a leftward shift of the foreign exchange demand curve?

The demand for a currency has decreased

What does a rightward shift of the foreign exchange supply curve for the US Dollar imply?

The supply of US Dollar has increased

What can cause a change in the supply or demand for a currency?

All of the above: A change in foreign tastes, a change in trade prices, a change in income levels.

Change in foreign tastes

Spending preferences of international consumers for imported and exported goods and services

Which of the following is true if exchange rates are freely floating?

The free market forces of demand and supply determine the equilibrium exchange rates.

Junwon and Humza are discussing currency exchange. If one Indian rupee is exchanged for three Japanese yen in the foreign exchange market, which of the following describes the foreign exchange market for Indian rupees?

There is a shortage of 40 rupees.

Rush, a French entrepreneur, decides to buy computers from the United States for his new tech startup. There would be an increase in which of the following in the foreign exchange market?

Demand for United States dollars and supply of euros

Factors leading to a nation's currency depreciation: Lower inflation, Higher reserve ratio, Decreased real interest rates, Increased demand, Decreased supply.

Decreased real interest rates in the nation compared with the rest of the world.

Which scenario will cause the United States dollar to depreciate relative to the euro? An increase in household income in the United States An increase in interest rates in the United States An increase in household income in Europe A decrease in interest rates in Europe A decrease in price level in the United States

An increase in household income in the United States

Zhiheng and Anisha are discussing the economy of their country. Zhiheng mentions that the value of their country’s currency will tend to appreciate if: demand for the country’s exports increases the country’s money supply increases the country’s citizens increase their travel abroad domestic interest rates decrease tariffs on the country’s imports decrease

demand for the country’s exports increases

The graph above shows the foreign exchange market for United States dollars in terms of Japanese yen. Assume that Kayato and AJ notice an increase in United States consumers’ preference for Japanese automobiles. What change will most likely take place in the market for dollars?

The supply of dollars will increase.

Factors leading to a depreciation of a nation’s currency: Lower inflation in the nation than in the rest of the world, Higher required reserve ratio in the nation than in the rest of the world, Decreased real interest rates in the nation compared with the rest of the world, Increased demand for the nation’s currency, Decreased supply of the nation’s currency.

Decreased real interest rates in the nation compared with the rest of the world.

What was a key strength of the gold standard?

It provided a balance-of-trade equilibrium

What is one argument critics make against the floating exchange rate system?

It causes import prices to rise and increases inflation

How does inflation influence exchange rates according to Woojin?

It leads to depreciation of the currency

What role do central banks play in the foreign exchange market?

They intervene to stabilize currency values

What is a potential disadvantage of a fixed exchange rate system?

It limits monetary policy flexibility

How can a country maintain a fixed exchange rate according to Dev?

By using foreign exchange reserves to buy or sell its own currency

What is one potential benefit of a floating exchange rate system?

It provides automatic adjustment of trade imbalances

Foreign Exchange Market-Revision Flashcards

Student preview

50 questions

Show all answers

1.

FLASHCARD QUESTION

Front

What is the market called where AJ and YoonSoo can exchange their local currency into Euros?

Back

a market for converting currency of one country into another country

2.

FLASHCARD QUESTION

Front

What is the purpose of the Forex market?

Back

To encourage international investment and trade.

3.

FLASHCARD QUESTION

Front

If Malaysia's inflation rate decreases, what will happen to the demand for US goods and services?

Back

Decrease

4.

FLASHCARD QUESTION

Front

How can the government of a foreign country influence the equilibrium exchange rate?

Back

Impose forex barriers, impose foreign trade barriers, intervene by buying and selling currency.

5.

FLASHCARD QUESTION

Front

How does the foreign exchange market react to news with future effects according to Hadi?

Back

Based on expectations.

6.

FLASHCARD QUESTION

Front

Factors that affect forex rates: a. Relative Price Level b. Relative Inflation Rate c. Relative Income Level d. Government Expenditure e. Relative to GDP

Back

Relative Inflation Rate, Relative Income Level, Government Expenditure

7.

FLASHCARD QUESTION

Front

Reasons for government intervention in the foreign exchange market.

Back

Establish implicit exchange rate boundaries

Access all questions and much more by creating a free account

Create resources

Host any resource

Get auto-graded reports

Continue with Google

Continue with Email

Continue with Classlink

Continue with Clever

or continue with

Microsoft

Apple

Others

Already have an account?

Similar Resources on Wayground

36 questions

U.S. History: Slavery and Political Events (1800s)

Flashcard

•

11th Grade

47 questions

Vocabulary Flashcards

Flashcard

•

10th Grade

54 questions

Elections and Politics Terms

Flashcard

•

12th Grade

54 questions

Reviewer-ITSM

Flashcard

•

KG - University

57 questions

Imperialism and Its Economic Impacts

Flashcard

•

11th Grade - University

37 questions

BOH4M Unit 1- Foundations of Management_MR_T

Flashcard

•

12th Grade

35 questions

Guiding Children's Behavior

Flashcard

•

University

Popular Resources on Wayground

5 questions

This is not a...winter edition (Drawing game)

Quiz

•

1st - 5th Grade

25 questions

Multiplication Facts

Quiz

•

5th Grade

10 questions

Identify Iconic Christmas Movie Scenes

Interactive video

•

6th - 10th Grade

20 questions

Christmas Trivia

Quiz

•

6th - 8th Grade

18 questions

Kids Christmas Trivia

Quiz

•

KG - 5th Grade

11 questions

How well do you know your Christmas Characters?

Lesson

•

3rd Grade

14 questions

Christmas Trivia

Quiz

•

5th Grade

20 questions

How the Grinch Stole Christmas

Quiz

•

5th Grade

Discover more resources for Social Studies

21 questions

WH/WGI Common Assessment #9 Review Quiz

Quiz

•

9th - 12th Grade

40 questions

US Gov Semester Exam

Quiz

•

12th Grade

25 questions

Christmas Movies!

Quiz

•

5th Grade - University

60 questions

Logos and Slogan Quiz

Quiz

•

10th Grade - University

40 questions

EOCA Review

Quiz

•

12th Grade

46 questions

Final Exam Review

Quiz

•

9th - 12th Grade