Learn Mode

International Economics and Exchange Rates Quiz

Go to Quiz Page

Which of the following is NOT a benefit of international trade?

Decreased competition

Explanation

International trade typically increases competition.

What is the term for the total value of all goods and services produced by a country in a given time period?

Gross Domestic Product (GDP)

Explanation

GDP measures a country's economic output.

What is the term for the difference between a country's total exports and total imports?

Current account balance

Explanation

Current account balance reflects a country's trade balance.

What is the term for a situation where a country's currency becomes less valuable relative to other currencies over time?

Depreciation

Explanation

Depreciation indicates a decline in the value of a currency.

What is the primary purpose of using trade barriers such as tariffs and quotas?

To protect domestic industries from foreign competition

Explanation

Trade barriers shield domestic industries from foreign competition.

What is the term for a situation where a country's imports exceed its exports?

Trade deficit

Explanation

A trade deficit indicates a negative balance of trade.

Which exchange rate system allows the value of a currency to be determined solely by the forces of supply and demand?

Flexible exchange rate

Explanation

In a flexible exchange rate system, currency value is market-driven.

What is the theory that suggests exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries?

Purchasing power parity

Explanation

Purchasing power parity ensures equal purchasing power across currencies.

What does the term 'balance of payments' refer to in international economics?

A record of all transactions between residents of one country and the rest of the world

Explanation

Balance of payments tracks a country's economic transactions with the world.

#10

Which organization acts as a lender of last resort for countries facing balance of payments problems?

International Monetary Fund (IMF)

Explanation

IMF provides financial assistance to countries in economic distress.

#11

Which exchange rate regime involves a government or central bank actively managing the value of its currency relative to other currencies?

Managed float exchange rate

Explanation

In a managed float system, authorities intervene to influence currency value.

#12

What is the main purpose of the International Monetary Fund (IMF)?

To stabilize exchange rates and assist in the reconstruction of the international payment system

Explanation

IMF aims to stabilize global monetary systems and support economic development.

#13

Which of the following is an example of a capital control?

Restrictions on foreign investment

Explanation

Capital controls limit cross-border financial transactions.

#14

Under a gold standard system, what is the main determinant of the value of a country's currency?

The amount of gold reserves held by the central bank

Explanation

Gold reserves back the value of currency in a gold standard system.

#15

What is the term for a situation where a country's government sells its own currency and buys foreign currency to increase the value of its currency relative to other currencies?

Revaluation

Explanation

Revaluation boosts the value of a country's currency against others.

#16

What is the term for a situation where a country's government sells its own currency and buys foreign currency to decrease the value of its currency relative to other currencies?

Devaluation

Explanation

Devaluation reduces the value of a country's currency against others.

International Economics and Exchange Rates Quiz

Which of the following is NOT a benefit of international trade?

What is the term for the total value of all goods and services produced by a country in a given time period?

What is the term for the difference between a country's total exports and total imports?

What is the term for a situation where a country's currency becomes less valuable relative to other currencies over time?

What is the primary purpose of using trade barriers such as tariffs and quotas?

What is the term for a situation where a country's imports exceed its exports?

Which exchange rate system allows the value of a currency to be determined solely by the forces of supply and demand?

What is the theory that suggests exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries?

What does the term 'balance of payments' refer to in international economics?

Which organization acts as a lender of last resort for countries facing balance of payments problems?

Which exchange rate regime involves a government or central bank actively managing the value of its currency relative to other currencies?

What is the main purpose of the International Monetary Fund (IMF)?

Which of the following is an example of a capital control?

Under a gold standard system, what is the main determinant of the value of a country's currency?

What is the term for a situation where a country's government sells its own currency and buys foreign currency to increase the value of its currency relative to other currencies?

What is the term for a situation where a country's government sells its own currency and buys foreign currency to decrease the value of its currency relative to other currencies?

Test Your Knowledge