Question 1

Coverage of risks due to fluctuating exchange rates is known as ---------&#10;A)Speculation&#10;B)Arbitrage&#10;C)Hedging&#10;D)Forward rate

Accepted Answer

Hedging is the practice of taking a position in one market to offset and balance against the risk adopted by assuming a position in a contrary or opposing market or investment. In the context of fluctuating exchange rates, hedging is used to reduce or limit the risk associated with currency movements.

Question 2

The demand for foreign exchange is determined by country's ------------&#10;A)Exports&#10;B)Imports&#10;C)Exports and imports&#10;D)None of these

Accepted Answer

The demand for foreign exchange is primarily determined by a country's imports, as foreign currency is needed to pay for goods and services purchased from abroad.

Question 3

Purchasing power purity theory was introduced by ------------&#10;A)Fisher&#10;B)Cassel&#10;C)Marshall&#10;D)Paul Einzing

Accepted Answer

Purchasing Power Parity (PPP) theory was introduced by Swedish economist Gustav Cassel in 1916. It explains that in the long run, exchange rates should adjust to equalize the price of identical goods and services in different countries.

Question 4

EURO is the currency of ----------------&#10;A)European Union&#10;B)Europe&#10;C)Britain&#10;D)None of these

Accepted Answer

The Euro (€) is the official currency of 19 out of the 27 European Union countries. These countries together are known as the Eurozone.

Question 5

The currency of Italy is ----------------&#10;A)Euro&#10;B)Dollars&#10;C)Yen&#10;D)Pound

Accepted Answer

Italy adopted the Euro (EUR) as its official currency in 1999, replacing the Italian Lira.

Question 6

The rate at which the exchange dealer is ready to buy a currency as known as ----------------&#10;A)Ask rate&#10;B)SWAP rate&#10;C)Spread&#10;D)Bid rate

Accepted Answer

The bid rate is the price at which the exchange dealer is willing to buy a currency. It represents the maximum price that a buyer is willing to pay for a currency.

Question 7

The members of the IMF are the members of --------------&#10;A)IFC&#10;B)IDA&#10;C)ADB&#10;D)IBRD

Accepted Answer

The members of the International Monetary Fund (IMF) are also members of the International Bank for Reconstruction and Development (IBRD), which is part of the World Bank Group. Membership in the IMF is a prerequisite for joining the IBRD.

Question 8

World Bank is also known as --------------------&#10;A)IBRD&#10;B)IFC&#10;C)IDA&#10;D)MIGA

Accepted Answer

The World Bank is commonly referred to as the International Bank for Reconstruction and Development (IBRD), which is one of its primary institutions.

Question 9

Balance of Trade is a ----&#10;A)Stock Concept&#10;B)Flow Concept&#10;C)Stock and Flow Concept&#10;D)None of these

Accepted Answer

Balance of Trade is considered a flow concept because it measures the difference in value between a country's exports and imports over a specific period of time, typically a year.

Question 10

Which one of the following items in the balance of payments is invisible&#10;A)Travel&#10;B)Shipping&#10;C)Export of goods&#10;D)Gifts

Accepted Answer

The answer of Which one of the following items in...

Question 11

Gold standard is an example of&#10;A)Floating exchange rate&#10;B)Fixed exchange rate&#10;C)Crawling peg&#10;D)Crawling bands

Accepted Answer

The answer of Gold standard is an example of&#10;A)Floating exchange...

Question 12

Flexible exchange rate is based on the concept of&#10;A)Supply&#10;B)Demand&#10;C)Demand and supply&#10;D)None of these

Accepted Answer

The answer of Flexible exchange rate is based on the...

Question 13

A BOP surplus can be corrected through --------------&#10;A)Export promotion&#10;B)Exchange control&#10;C)Appreciation&#10;D)Increase in interest

Accepted Answer

The answer of A BOP surplus can be corrected through...

Question 14

BOP deficit can be corrected through --------------&#10;A)Increasing imports&#10;B)Increasing exports&#10;C)Increase in interest rates&#10;D)None of these

Accepted Answer

The answer of BOP deficit can be corrected through --------------&#10;A)Increasing...

Question 15

Foreign exchange is demanded by -------------&#10;A)Exporters&#10;B)Domestic travelers&#10;C)Importers&#10;D)None of these

Accepted Answer

The answer of Foreign exchange is demanded by -------------&#10;A)Exporters&#10;B)Domestic travelers&#10;C)Importers&#10;D)None...

Question 16

Devaluation will improve when elasticity of demand of country's export and import is&#10;A)Less than one&#10;B)Equal to one&#10;C)Infinity&#10;D)Greater than one

Accepted Answer

The answer of Devaluation will improve when elasticity of demand...

Question 17

Deficit BOP can be solved by --------------------&#10;A)Expenditure switching policies&#10;B)Expenditure reducing policies&#10;C)Both a and b&#10;D)None of these

Accepted Answer

The answer of Deficit BOP can be solved by --------------------&#10;A)Expenditure...

Question 18

Floating exchange rate become common in ----------------&#10;A)1980's&#10;B)1970's&#10;C)1960's&#10;D)1950's

Accepted Answer

The answer of Floating exchange rate become common in ----------------&#10;A)1980's&#10;B)1970's&#10;C)1960's&#10;D)1950's...

Question 19

The difference between the value of goods and services exported and imported is called -------------&#10;A)BOP&#10;B)BOT&#10;C)Balance on Capital Account&#10;D)Balance of Current Account

Accepted Answer

The answer of The difference between the value of goods...

Question 20

The convertibility of dollar was formally abandoned in ---------------&#10;A)1962&#10;B)1966&#10;C)1973&#10;D)1971

Accepted Answer

The answer of The convertibility of dollar was formally abandoned...

Question 21

Soft loans to underdeveloped countries are disbursed by -----------&#10;A)IDA&#10;B)IBRD&#10;C)GATT&#10;D)ADB

Accepted Answer

The answer of Soft loans to underdeveloped countries are disbursed...

Question 22

IFC was established in ----------------&#10;A)1958&#10;B)1956&#10;C)1954&#10;D)1950

Accepted Answer

The answer of IFC was established in ----------------&#10;A)1958&#10;B)1956&#10;C)1954&#10;D)1950...

Deck 1: Insurance Types and Terms