#1
What is an exchange rate regime?
A system to regulate international trade
A set of rules governing foreign exchange markets
A method to stabilize domestic currency value
A policy to control inflation
#2
Which of the following is a fixed exchange rate regime?
Floating exchange rate
Pegged exchange rate
Crawling peg
Managed float
#3
Under a managed float exchange rate system, who intervenes in the foreign exchange market?
Only central banks
Only the government
Market participants
Both central banks and the government
#4
What is a primary advantage of a floating exchange rate regime?
Enhanced stability in international trade
Ability to easily manipulate currency value
Independence from external economic shocks
Flexibility in adjusting to economic conditions
#5
What is a primary disadvantage of a fixed exchange rate regime?
Vulnerability to currency speculation
Inability to control inflation
Lack of stability in international trade
Limited flexibility in monetary policy
#6
Which of the following is a benefit of adopting a flexible exchange rate regime?
Reduced exchange rate risk
Increased currency stability
Greater control over capital flows
Enhanced trade competitiveness
#7
Under a floating exchange rate system, the currency value is determined by:
Central bank interventions
Government regulations
Market forces of supply and demand
Bilateral agreements
#8
What is a currency board?
A central bank managing monetary policy
A system where domestic currency is backed 100% by foreign reserves
A mechanism to control capital flows
An institution managing fiscal policy
#9
In the context of exchange rates, what does the term 'currency peg' mean?
A fixed exchange rate system
A country's commitment to maintain the value of its currency at a fixed rate
A floating exchange rate regime
A flexible monetary policy
#10
What is the Plaza Accord?
An agreement to establish a common currency for European countries
An agreement to depreciate the U.S. dollar
An accord between OPEC nations to stabilize oil prices
An agreement to strengthen the Japanese yen
#11
What is the main difference between a fixed and a pegged exchange rate regime?
Flexibility in adjusting currency value
Level of government intervention
Degree of stability in currency value
Presence of currency reserves
#12
Which of the following is a characteristic of a freely floating exchange rate regime?
Government-imposed currency valuation
Constant intervention by central banks
Market-driven currency valuation
Fixed exchange rates with major currencies
#13
Which exchange rate regime provides a combination of fixed and floating exchange rates?
Pegged exchange rate
Managed float
Crawling peg
Currency board
#14
What is the Trilemma in international economics?
A policy conflict involving exchange rates, monetary policy, and fiscal policy
A trade agreement between three countries
A system to stabilize commodity prices
An international organization for economic cooperation
#15
Which country is known for adopting a dual exchange rate system?
United States
China
Brazil
Germany
#16
Under a currency board system, what backs the domestic currency?
Foreign currency reserves
Domestic gold reserves
Government bonds
International loans
#17
Which exchange rate system is characterized by periodic adjustments to the official exchange rate?
Floating exchange rate
Fixed exchange rate
Crawling peg
Pegged exchange rate
#18
Which country abandoned its fixed exchange rate regime during the European Exchange Rate Mechanism (ERM) crisis in 1992?
France
Germany
Italy
United Kingdom