Unit 4: International Finance

A monetary unit that is freely and easily converted into other currencies is:

• A. Hard Currency

• B. Soft Currency

• C. An exchange Control

• D. A trade credit

When a country has favorable trade balances, its currency is usually stable or rising

• A. True

• B. False

A system in which currency values are based on supply and demand is:

• A. A foreign exchange market

• B. A currency future

• C. An exchange control

• D. A floating exchange rate

A soft currency is a currency that is easy to exchange for another currency

• A. True

• B. False

A Currency Future is:

• A. An exchange rate

• B. An exchange control

• C. A contract

• D. A floating currency

A country's currency usually declines in value if the country's debt increases significantly

• A. True

• B. False

Salt was used as money once but would not work well today because:

• A. It would be difficult to persuade someone to accept salt as money

• B. Salt is not durable

• C. Salt is not scarce

• D. All of these

The exchange rate for a stable country:

• A. Remains the same unless there is political change

• B. Changes based on supply and demand

• C. Is based on the U.S. dollar

• D. Is based on gold

An example of an exchange control is when the government limits the amount of money a tourist may take out of the country

• A. True

• B. False

While in India, you purchasd a hat for $15 U.S. dollars. How many rupees would you pay if each rupee was 0.32 U.S. dollars?

• A. 48 Rupees

• B. 233.33 Rupees

• C. 450 Rupees

• D. 468.75 Rupees