Question 1

If the U.S. dollar price of the New Zealand dollar (NZD) is $0.5709, then the NZD price of one U.S. dollar will be:
A) 1.5709 NZD.
B) 1.75 NZD.
C) 1.6711 NZD.
D) 0.5709 NZD.

Accepted Answer

B

Question 2

If the exchange rate between the Canadian dollar [C$] and the U.S. dollar [$] on January 6, 2010 is C$/$ = 1.03, then the exchange rate $/C$ will be:
A) 0.67.
B) 0.79.
C) 0.97.
D) 1.97.
E) 1.33.

Accepted Answer

The exchange rate $/C$ is the reciprocal of C$/$, so $/C$ = 1 / 1.03 = 0.97.

Question 3

If one U.S. dollar = 11.76 Mexican pesos [Ps], then the reciprocal exchange rate is:
A) 1 Ps = $11.76.
B) $1 = Ps 3.92.
C) $1 = Ps 0.008.
D) $1 = Ps 0.085.
E) 1 Ps = $0.085.

Accepted Answer

The reciprocal exchange rate is found by taking the inverse of the given rate. If $1 = 11.76 Ps, then 1 Ps = $1/11.76 = $0.085.

Question 4

If the price of a digital SLR camera in Japan is ¥55,000, and the exchange rate is 93 ¥/$, calculate the dollar price of the digital SLR camera in Japan.
A) $603.29
B) $397.48
C) $886.82
D) $591.40
E) $101

Accepted Answer

The answer of If the price of a digital SLR...

Question 5

_____ is a specific location in New York City where contracts to deliver agricultural and metal products are bought and sold.
A) The U.S. Department of Commerce
B) The New York Stock Exchange
C) The Commodity Exchange
D) The Barclays Bank
E) The U.S. Commodity Futures Trading Commission

Accepted Answer

The Commodity Exchange, also known as COMEX, is a specific location in New York City where contracts to deliver agricultural and metal products are bought and sold. The other options listed are not directly related to commodity trading. The U.S. Department of Commerce is a government agency responsible for promoting economic growth, the New York Stock Exchange is a stock exchange for buying and selling stocks and other securities, Barclays Bank is a financial institution that provides banking services, and the U.S. Commodity Futures Trading Commission is a government agency that regulates commodity futures and options trading.

Question 6

Currency and bank deposits that are denominated in foreign money are called:
A) traveler's checks.
B) international funds.
C) foreign exchange.
D) foreign remittances.
E) international bonds.

Accepted Answer

Currency and bank deposits denominated in foreign money are referred to as foreign exchange. Traveler's checks are a form of payment that can be used while traveling. International funds and international bonds refer to investment vehicles that involve multiple countries. Foreign remittances refer to money sent by an individual in one country to another country.

Question 7

If the current dollars/peso exchange rate is $0.10 per peso, so that 10 pesos buy you a dollar, then how many dollars do you need to buy something that costs 50 pesos?
A) $50
B) $5
C) $15
D) $0.50
E) $1.50

Accepted Answer

Given the exchange rate of $0.10 per peso, to buy something that costs 50 pesos, you would need 50 * $0.10 = $5.

Question 8

An exchange rate can be described as:
A) the price of a foreign currency as determined by the World Bank.
B) the price of one country's currency in terms of another country's currency.
C) the dollar value of imports and exports undertaken in the world economy during a year.
D) the price of foreign currency as established by the relative amount of tourism.
E) the dollar value of U.S. international trade.

Accepted Answer

An exchange rate is the price of one country's currency in terms of another country's currency. It is the ratio at which one currency can be exchanged for another.

Question 9

Given an exchange rate of 120 yen = $1, what is the U.S. dollar price of 1 yen?
A) $0.025
B) $0.0083
C) $120
D) $0.0012
E) $1

Accepted Answer

To find the U.S. dollar price of 1 yen, we need to take the reciprocal of the given exchange rate: 1/120 yen per $1 = $0.0083 per yen.

Question 10

If the price in U.S. dollars for one Singapore dollar is 0.625 U.S. dollars, then the price in Singapore dollars for one U.S. dollar is:
A) 1.0 Singapore dollars.
B) 0.625 Singapore dollars.
C) 1.6 Singapore dollars.
D) 0.375 Singapore dollars.
E) 2.66 Singapore dollars.

Accepted Answer

To find the price in Singapore dollars for one U.S. dollar, we need to invert the given exchange rate. In other words, we need to divide 1 by 0.625 to get the price of 1 U.S. dollar in Singapore dollars.

1 ÷ 0.625 = 1.6

Therefore, the price in Singapore dollars for one U.S. dollar is 1.6 Singapore dollars. The answer is choice C.

Question 11

A majority of international transactions involve the buying and selling of _____.
A) bank deposits denominated in foreign currency
B) currency notes
C) traveler's checks
D) stocks denominated in domestic currency
E) bills of exchange

Accepted Answer

Bank deposits denominated in foreign currency are commonly used in international transactions as they facilitate the transfer of large sums of money across borders efficiently.

Question 12

The demand for foreign currency in the United States is based on the demand for:
A) domestic goods and services.
B) domestic exports.
C) gold.
D) foreign goods and services.
E) U.S. dollars.

Accepted Answer

The demand for foreign currency in the United States is based on the demand for foreign goods and services. When US consumers and businesses want to buy goods and services from other countries, they need to exchange their dollars for the foreign currency or currencies needed to make those purchases. This drives up the demand for foreign currency.

Question 13

A rise in the value of a currency in relation to another currency in the international market is called:
A) appreciation.
B) depreciation.
C) devaluation.
D) conservation.
E) redenomination.

Accepted Answer

Appreciation refers to the increase in value of a currency in comparison to another currency in the international market. This increase can occur due to various reasons such as increased demand for the currency or a decrease in supply. This leads to the currency being able to purchase more goods and services in other countries.

Question 14

Markets in which the currencies of different countries across the world are traded are called:
A) stock markets.
B) foreign exchange markets.
C) loanable funds markets.
D) commodity markets.
E) money markets.

Accepted Answer

Foreign exchange markets are where currencies from different countries are traded. Stock markets are where stocks from companies are traded, loanable funds markets are where loans and bonds are traded, commodity markets are where goods such as metals, oil, and agricultural products are traded, and money markets are where short-term debt securities are bought and sold.

Question 15

If the exchange rate between the Canadian dollar (C$) and the U.S. dollar ($) changes from 1C$ = $1.30 to 1C$ = $1.05 we can say that:
A) the U.S. dollar has depreciated with respect to all the currencies across the world.
B) the Canadian dollar has appreciated with respect to the U.S. dollar.
C) the U.S. dollar has appreciated with respect to the Canadian dollar.
D) the Canadian dollar has depreciated with respect to all the currencies across the world.
E) the Canadian dollar has appreciated with respect to all the currencies across the world.

Accepted Answer

The answer of If the exchange rate between the Canadian...

Question 16

Which of the following correctly describes a foreign exchange market?
A) A place where foreign goods are bought and sold in any country
B) A market in which foreign tourists can buy domestic goods
C) A global market in which people exchange one currency for another
D) A place where contracts to deliver agricultural products across countries are exchanged
E) A market where the central banks of different countries exchange government bonds

Accepted Answer

A foreign exchange market is a global market where people exchange one currency for another. This happens through currency trading, which allows individuals, institutions, and governments to buy and sell currencies with the aim of generating a profit or managing risk. The foreign exchange market is the largest financial market in the world, with an average daily turnover of over $5 trillion.

Question 17

The Wall Street Journal publishes an exchange rate of US$/C$ = 0.714, where US$ represents the U.S. dollar and C$ represents the Canadian dollar. What does this mean?
A) The Canadian dollar price of one U.S. dollar is US$0.714.
B) The Canadian dollar price of one U.S. dollar is C$0.714.
C) The U.S. dollar price of one Canadian dollar is C$1.40.
D) The U.S. dollar price of one Canadian dollar is US$1.40
E) The U.S. dollar price of one Canadian dollar is US$0.714.

Accepted Answer

The exchange rate of US$/C$ = 0.714 means that one U.S. dollar is worth 0.714 Canadian dollars.

Question 18

On December 29th, the cost of a skiing trip to Finse, Norway, was 6,500 krone. Two weeks later, the American dollar appreciated against the Norwegian krone. If the price of the trip in Norway remains the same, _____.
A) an American skier living in Florida will now view this trip as cheaper compared to before
B) an American skier living in Florida will now view this trip as highly expensive compared to before
C) an American skier living in Florida will now view this trip as of the same value as before
D) an American skier living in Florida will now value this trip less as compared to before
E) an American skier living in Florida will no longer take this trip

Accepted Answer

If the American dollar appreciated against the Norwegian krone, then it would take fewer dollars to purchase the same amount of krone. Therefore, an American skier living in Florida would view the skiing trip in Finse, Norway as cheaper compared to before.

Question 19

On a given day, the exchange rate for one U.S. dollar is 1.2 Canadian dollars and 0.5 British pounds. Exactly six months later, the exchange rate for one U.S. dollar is 1.1 Canadian dollars and 0.7 British pound. From the information given, we can say that:
A) the dollar has appreciated relative to Canadian dollars and depreciated relative to British pounds.
B) the dollar has appreciated relative to British pounds and depreciated relative to Canadian dollars.
C) the dollar has appreciated relative to both British pounds and Canadian dollars.
D) the dollar has depreciated relative to both British pounds and Canadian dollars.
E) there is no change in the relative value of the U.S. dollar.

Accepted Answer

Initially, 1 USD = 1.2 CAD and 1 USD = 0.5 GBP
After six months, 1 USD = 1.1 CAD and 1 USD = 0.7 GBP
This means that the USD has appreciated relative to the GBP (from 0.5 to 0.7) and depreciated relative to the CAD (from 1.2 to 1.1). Therefore, option B is the correct choice.

Question 20

The domestic currency value of the foreign currency price of a product is equal to:
A) the reciprocal exchange rate between the domestic and foreign currency.
B) the reciprocal of the foreign currency price of the product.
C) the difference between the foreign currency price of the product and the exchange rate between the domestic and foreign currency.
D) the foreign currency price of the product multiplied by the exchange rate between the domestic and foreign currency.
E) the reciprocal exchange rate between the domestic and foreign currency divided by the foreign currency price of the product.

Accepted Answer

The domestic currency value of the foreign currency price of a product is found by multiplying the foreign currency price by the exchange rate between the domestic and foreign currency. This converts the price from the foreign currency into the domestic currency.

Quiz 6: An Introduction to the Foreign Exchapterange Market and the Balance of Payments

If the U.S. dollar price of the New Zealand dollar (NZD) is $0.5709, then the NZD price of one U.S. dollar will be:

If the exchange rate between the Canadian dollar [C$] and the U.S. dollar [$] on January 6, 2010 is C$/$ = 1.03, then the exchange rate $/C$ will be:

If one U.S. dollar = 11.76 Mexican pesos [Ps], then the reciprocal exchange rate is:

If the price of a digital SLR camera in Japan is ¥55,000, and the exchange rate is 93 ¥/$, calculate the dollar price of the digital SLR camera in Japan.

_____ is a specific location in New York City where contracts to deliver agricultural and metal products are bought and sold.

Currency and bank deposits that are denominated in foreign money are called:

If the current dollars/peso exchange rate is $0.10 per peso, so that 10 pesos buy you a dollar, then how many dollars do you need to buy something that costs 50 pesos?

An exchange rate can be described as:

Given an exchange rate of 120 yen = $1, what is the U.S. dollar price of 1 yen?

If the price in U.S. dollars for one Singapore dollar is 0.625 U.S. dollars, then the price in Singapore dollars for one U.S. dollar is:

A majority of international transactions involve the buying and selling of _____.

The demand for foreign currency in the United States is based on the demand for:

A rise in the value of a currency in relation to another currency in the international market is called:

Markets in which the currencies of different countries across the world are traded are called:

If the exchange rate between the Canadian dollar (C$) and the U.S. dollar ($) changes from 1C$ = $1.30 to 1C$ = $1.05 we can say that:

Which of the following correctly describes a foreign exchange market?

The Wall Street Journal publishes an exchange rate of US$/C$ = 0.714, where US$ represents the U.S. dollar and C$ represents the Canadian dollar. What does this mean?

On December 29th, the cost of a skiing trip to Finse, Norway, was 6,500 krone. Two weeks later, the American dollar appreciated against the Norwegian krone. If the price of the trip in Norway remains the same, _____.

On a given day, the exchange rate for one U.S. dollar is 1.2 Canadian dollars and 0.5 British pounds. Exactly six months later, the exchange rate for one U.S. dollar is 1.1 Canadian dollars and 0.7 British pound. From the information given, we can say that:

The domestic currency value of the foreign currency price of a product is equal to: