Foreign Exchange Fun Quiz

The largest centre for trading in foreign exchange is

• New York

• London

• Tokyo

• Hong Kong

Which of the following conditions may lead to a decline in the value of a country's currency?

• Low-interest rates

• High inflation

• Large current account deficit

• 2 and 3 options

The large U.S. current account deficit implies that

• U.S. interest

  rates are too high.

• the value of

  the dollar is too weak.

• the United States must rely on foreigners to be willing to invest in the United States.

• None correct

A current account deficit implies that

• more goods and services are exported than are imported.

• the country borrowed from abroad more than it loaned and/or sold off some of its assets.

• the country is going bankrupt

• the value of the dollar will rise

The ________________ measures the net flows of imports and exports of goods, services, income payments, and unilateral transfers.

• current account

• capital account

• statistical discrepancy

• basic balance

  account

The concept underlying purchasing power parity is the

• Fisher effect.

• Bretton Woods Agreement.

• law of one price.

• Big Mac Index.