Question

The foreign exchange rate is defined as the Question 64 Not yet answered Points out of 100 Remove flag Select one: © A. volume of the world currencies traded. B. equal to the amount of the current account deficit. C. equal to the amount of the capital account deficit. D. rate or the speed with which the currencies of the worlds are traded. E.price at which one currency exchanges for another. Other things remaining the same, as U.S. imports increase the quantity of Question 65 Not yet answered Points out of 100 Remove flag Select one: © A. foreign currency demanded increases. B.U.S. dollars demanded increases. C. foreign currency supplied increases. D.U.S. dollars supplied decreases E. foreign currency demanded decreases

Answer 1

65. The exchange rate is best defined as the rate at which one currency is expressed in terms of other currency. The exchange rates are depended upon the supply and demand for currencies. In fixed exchange rate system the monetary authority sets the exchange rate.

Ans: E). Price at which one currency exchanges for another.

65. If there is an increase in the imports, the demand for the foreign currency will increase. This is because the payments for the imports has to be done in foreign currency so the people demand more foreign currency.

Ans: A. Foreign currency demand increases.