International finance and the foreign exchange market

International finance refers to the financial transactions that take place between countries and organizations. This includes the flow of money for trade, investment, and other financial transactions. One of the most important aspects of international finance is the foreign exchange market, also known as the forex market.

The foreign exchange market is a decentralized market where currencies are bought and sold. It is the largest financial market in the world, with an average daily trading volume of over $5 trillion. The market is open 24 hours a day, five days a week, and currencies are traded globally among the major financial centers of London, New York, Tokyo, and Sydney.

The foreign exchange market plays a crucial role in the global economy, as it allows countries and organizations to buy and sell goods and services in different currencies. For example, a U.S. company may need to purchase goods from a supplier in Japan, and in order to do so, it must exchange U.S. dollars for Japanese yen. This transaction takes place in the foreign exchange market.

In addition to facilitating international trade, the foreign exchange market is also used by investors and speculators to make profit from currency fluctuations. They may buy and sell currencies based on their expectation of future exchange rate movements.

The foreign exchange market is also closely watched by central banks and governments, as currency exchange rates can have a significant impact on a country’s economy. Central banks may intervene in the market to stabilize their currency, while governments may use exchange rate policies to promote exports or discourage imports.

Overall, the foreign exchange market is a vital component of international finance, playing a crucial role in facilitating global trade and investment, and influencing economic policy around the world.

1.Identify the correct statement about a nation’s currency.
2.Which of the following would be included as a credit item in the capital-account transactions of the United States?
3.Which of the following is most likely to result in an inflow of financial capital to a country?
4.Which of the following transactions is likely to be included in the capital account of the U.S.?
5.Which of the following occurs as the result of a depreciation of a nation’s currency in the foreign exchange market?
6.Suppose Canada was the largest trading partner of the United States in 2020. If the average price level in Canada was relatively stable, while the general level of prices in the United States rose by 3 percent in 2020, which of the following would be most likely to occur?
7.Which of the following will be true of the balance-of-payments accounts under a pure flexible exchange rate system?
8.Which of the following is most likely to occur in the foreign exchange market when the dollar price of a foreign currency falls below the equilibrium level?
9.Which of the following is most likely to occur when there is an increase in the real interest rate of a country relative to other countries?
10.Which of the following transactions are included in the current account of the U.S.?
11.During recent decades, the United States has persistently run trade deficits. Which of the following is true regarding these trade deficits?
12.Under a fixed-rate unified currency regime, each country belonging to the system
13.Which of the following would be classified as a debit item in the current-account transactions of a country?
14.Suppose the Canadian dollar per euro exchange rate was 1.40 in 2015 and the Canadian dollar per U.S. dollar exchange rate was 1.30 in 2015. If the Canadian dollar per euro exchange rate increases to 1.50 in 2016 and the Canadian dollar per U.S. dollar exchange rate decreases to 1.25 in 2016, which of the following is true in this case?
15.Which of the following is true of the foreign exchange market?
16.Which of the following is true of balance of trade?
17.Suppose India and Canada are trading partners. Which of the following will result in an increase in the supply of loanable funds (inflow of financial capital) in India?
18.Suppose a country faces political instability and has high and variable rates of inflation. Which of the following is most likely to occur under these circumstances?
19.Other things constant, if Americans increased their purchase of Mexican vehicles, this will result in a(n):
20.Suppose the Canadian dollar per euro exchange rate was 1.4 in 2020. Given the information, the dollar price of a bottle of French perfume selling for 100 euros will be:
21.Suppose a Japanese citizen purchases U.S. Treasury bills. This will cause:
22.Suppose a British investor decides to set up an automobile factory in Canada. This will cause:
23.Suppose in a two-economy world, Britain and the United States trade between themselves. Which of the following is likely to be true in this case?
24.Suppose France and Canada are major trading partners. Which of the following will cause an appreciation of the Canadian dollar?
25.Which of the following purchases will involve a foreign exchange transaction?
26.Which of the following is true of a currency board?
27.Suppose Britain is the largest trading partner of the United States and the U.S. dollar per pound exchange rate in equilibrium is $1.50 = 1 pound. Which of the following is likely to occur if the dollar price per pound increases above the equilibrium?
28.Which of the following is a feature of a pegged exchange rate system?
29.The sum of the debit and credit items of the balance-of-payments accounts must be:
30.Other things constant, which of the following will cause the currency of a nation to appreciate in the foreign exchange market?
31.Which of the following would be most likely to cause a current-account deficit in a country?
32.Which of the following is most likely to occur when foreigners make more investments in a country than the residents of the country make abroad?
33.Which of the following is a function of the International Monetary Fund (IMF)?
34.Which of the following is a feature of a pure gold standard system?
35.Which of the following is true of the balance of payments account?
36.A country with highly attractive domestic investment opportunities and a low savings rate will tend to
37.Which of the following will cause a decrease in the demand for U.S. dollars in the foreign exchange market?
38.If the U.S. dollar appreciates relative to the British pound:
39.Suppose 1 British pound exchanges for 1.50 U.S. dollars. If the price of a smartphone in London is 2,000 pounds, then the dollar price of the phone to an American would be:
40.Which of the following is true of a currency board?
41.Which of the following led to the demise of the fixed exchange rate regime that dominated for a quarter of a century following World War II?
42.Which of the following is a credit item in the current-account transactions of a country?
43.Which of the following is most likely to increase the demand for U.S. dollars in the foreign exchange market?
44.Which of the following will occur if the Canadian dollar depreciates against other major currencies in the foreign exchange market?
45.Which of the following is true of a fixed exchange rate system?
46.The balance of merchandise trade is also called:
47.Other things constant, which of the following will cause the currency of a nation to depreciate in the foreign exchange market?
48.Identify the correct statement about the exchange rate of a country.
49.Suppose Mexico is a major trading partner of Canada. A sudden decrease in the average income of Mexican consumers is likely to cause:

Показать комментарииЗакрыть комментарии

Оставить комментарий