AP Macroeconomics Unit 6

The more valuable currency has

• depreciated
• appreciated
• depleted
• amortizes

When a country's currency appreciates, its exports ____

• double
• become cheaper
• become more expensive
• Drop by at least 1/2

Difference between sale of assets to foreigners and purchases of assets from foreigners is called_____

• financial account
• exchange account
• international trade
• current account

A country's ____ accounts are a summary of their transactions with other countries

• Exchange
• Balance of payment
• Income statement
• line of credit

The price of one nation's currency expressed in terms of another's currency is called

• world price
• exchange rate
• purchasing power parity
• terms of trade

What is a 'Fixed Exchange Rate'

• the government/central bank entirely or predominantly determines the exchange rate.

• the forex market entirely or predominantly determines the exchange rate.

• the trading partners entirely or predominantly determines the exchange rate.

• the importing countries entirely or predominantly determines the rate.

A floating exchange rate is a regime where the currency price is set by the

• forex market based on demand for the currency compared with other currencies.

• forex market based on supply and demand compared with other currencies.

• central banking authority

• the country who is trading with our country

What is the difference between a fixed and a floating exchange rate?

• A fixed exchange rate is set by the monetary authority with respect to a foreign currency or a basket of foreign currencies, a floating exchange rate is determined in foreign exchange markets depending on demand and supply, and it generally fluctuates constantly.

• There is no difference between them, both determined by the central bank.

• A fixed exchange rate is better than the floating exchange rate in determining the exchange rate of a particular country's currency.

• All of the answers above.

if 1 $ = Rs. 50, and if rises to 1 $ = Rs. 60 it will be called

• appreciation
• depreciation
• revaluation
• all the above

If 1 $ = Rs. 50 and now it becomes 1 $ = Rs 40 it will be called 

• Depreciation
• appreciation
• devaluation
• none of the above