The supply side of the foreign exchange markets includes ? Select one: a. ?forei

ID: 2614524 • Letter: T

Question

The supply side of the foreign exchange markets includes ?

Select one:

?foreign consumers and foreign firms selling locally.

?foreign tourists headed to local destinations and domestic consumers.

?both domestic and foreign firms selling locally.

?domestic consumers and domestic tourists headed abroad.

Special Drawing Rights (SDRs)

Select one:

a. represents an international currency created by the IMF

b. represents an international currency created by the World Bank

c. represents an international currency created by the Federal Reserve

d. represents an international currency created by the ECB

When calculating the US Balance of Payments, if the Current and Capital account transactions do not balance with the Financial account transactions,

a. a statistical discrepancy adjustment may be required

b. this indicates that there is a trade deficit

c. this indicates there is a trade surplus

d. an error has occurred because these accounts always balance

If the US is running a trade deficit, in the FX market that means

a. a demand for foreign currency

b. a demand for US currency

c. the value of the US dollar should rise

d. the value of the foreign currency should fall

The Purchasing Power Parity theory assumes that

a. exchange rates are only influenced by relative inflation rates across countries

b. transportation costs exist and most be accounted for

c. tariffs exist and most be accounted for

d. goods vary from country to country

b foreign tourist... a created by IMF d account always balances a demand for foreign currency a ....influenced by inflation

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