QUESTION 9 In a flexible exchange rate regime, when the exchange rate increases

Question

QUESTION 9 In a flexible exchange rate regime, when the exchange rate increases the domestic currency is o a. Undervalued b. Appreciated O c. Depreciated od.Overvalued QUESTION 10 Which of the following is NOT a function of the interbank part of the foreign exchange market? o a. Permits a bank to take on a position in a foreign currency quickly if the bank and its traders want to speculate on exchange-rate movements in the near future Ob. Provides a bank the means to readjust its own position quickly and at low cost when it separately conducts a large trade with a customer c. Provides a bank with a continuous stream of information on conditions in the foreign exchange market od. Provides clearing services for organizations that prefer to use different currencies

Explanation / Answer

Question 9). Answer :- Option c). Depreciated.

Explanation :- Due to increase / rise in exchange rate, The value of domestic currency will depreciate / fall.

Question 10). Answer :- Option d). Provides clearing services for organizations that prefer to use different currencies.

Explanation :- The statements mentioned in options a, b and c are the functions of inter-bank part of foreign exchange market in economics. However, The statement mentioned in option (d) is not any function of the inter-bank part of foreign exchange market in the economics.

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