McqMate
Chapters
1. |
Which function of foreign exchange market protects against the foreign exchange risk? |
A. | Credit function |
B. | Hedging function |
C. | Transfer function |
D. | All of them |
Answer» B. Hedging function |
2. |
Reduction in the value of domestic currency by the government is called |
A. | depreciation |
B. | devaluation |
C. | revaluation |
D. | appreciation |
Answer» B. devaluation |
3. |
Reduction in the value of domestic currency through market forces is called |
A. | depreciation |
B. | devaluation |
C. | revaluation |
D. | appreciation |
Answer» A. depreciation |
4. |
Increase in the value of domestic currency by the government is called |
A. | depreciation |
B. | devaluation |
C. | revaluation |
D. | appreciation |
Answer» C. revaluation |
5. |
What will be the effect on exports if foreign exchange rate increases? |
A. | Increases |
B. | Decreases |
C. | Remains constant |
D. | None of them |
Answer» A. Increases |
6. |
Foreign exchange is demanded by.. |
A. | domestic residents to purchase goods and services from other countries |
B. | sending gifts and grants to foreign countries (abroad |
C. | the domestic residents to purchase financial assets in a particular country |
D. | all of them |
Answer» D. all of them |
7. |
The supply of foreign exchange comes from.. |
A. | the foreigners purchasing home country's goods and services through exports |
B. | the foreigners who invest in home country through joint ventures or through financial market operations |
C. | currency dealers and speculators. |
D. | all of them |
Answer» D. all of them |
8. |
Buyers and sellers of foreign exchange are |
A. | central banks |
B. | commercial banks |
C. | brokers |
D. | all of them |
Answer» D. all of them |
9. |
Which exchange rate measures the average relative strength of a given currency with respect to other currencies without eliminating the effect of change in price? |
A. | Nominal exchange rate |
B. | Nominal effective exchange rate |
C. | Real exchange rate |
D. | Real effective exchange rate |
Answer» D. Real effective exchange rate |
10. |
When one country manipulates exchange rate against the interest of other country, is known as |
A. | managed floating |
B. | dirty floating |
C. | wide band |
D. | crawling peg |
Answer» B. dirty floating |
11. |
Other things remaining the unchanged, when in a country the price of foreign currency rises, national income is: |
A. | Likely to rise |
B. | Likely to fall |
C. | Likely to rise or to fall |
D. | Not affected |
Answer» A. Likely to rise |
12. |
Other things remaining the same, when in a country the market price of foreign currency falls, national income is likely |
A. | to rise |
B. | to fall |
C. | to rise or to fall |
D. | to remain unaffected |
Answer» B. to fall |
13. |
Devaluation which means fall in value of domestic currency in terms of foreign currency takes place in |
A. | Flexible Exchange Rate regime |
B. | Fixed Exchange Rate regime |
C. | Both (a) and (b |
D. | Neither |
Answer» B. Fixed Exchange Rate regime |
14. |
A change from Rs. 60 = 1 dollar to Rs 62 = dollars indicates that Rs has |
A. | Appreciated |
B. | Depreciated |
C. | Neither |
D. | Either a or b |
Answer» B. Depreciated |
15. |
The larger fluctuations in portfolio value of foreign exchange of financial institutions leads to |
A. | greater liquidity of assets |
B. | greater volatility of rates |
C. | lesser volatility of rates |
D. | lesser liquidity of assets |
Answer» B. greater volatility of rates |
16. |
Other things remaining unchanged, when in a country the price of foreign currency rises, national income is |
A. | Likely to rise |
B. | Likely to fall |
C. | both |
D. | Not affected |
Answer» A. Likely to rise |
17. |
Indirect quotation is also known as |
A. | home currency quotation |
B. | foreign currency quotation |
C. | European quotation |
D. | American quotation |
Answer» B. foreign currency quotation |
18. |
If rupee is getting depreciated fast and is considered undesirable by the government, the RBI may be advised to |
A. | Sell dollars in the foreign exchange market |
B. | Purchase dollars |
C. | Print more currency notes |
D. | Raise tariffs on imports |
Answer» A. Sell dollars in the foreign exchange market |
19. |
If in an effort to control depreciation of rupee the RBI puts more dollars in the supply, it may lead to greater inflation, caused by |
A. | Increase in money supply in the economy |
B. | Reduced availability of goods due to increased exports. |
C. | Reduced availability of goods due to reduced imports |
D. | All of the above. |
Answer» D. All of the above. |
20. |
In which of the following items raises the supply of foreign exchange ? |
A. | Import of goods from China |
B. | Indian students going to USA for MBA |
C. | Donation of 50 million $ received from Microsoft |
D. | Purchase of land in England |
Answer» C. Donation of 50 million $ received from Microsoft |
21. |
A change from Rs. 140 = 2 £ to Rs. 60 = 1 £ indicates that Rs. is |
A. | Appreciated |
B. | Depreciated |
C. | Neither |
D. | Either (a) or (b |
Answer» A. Appreciated |
22. |
Depreciation of domestic currency leads to rise in: |
A. | Exports |
B. | Imports |
C. | Both (a) and (b |
D. | Neither (a) nor (b |
Answer» A. Exports |
23. |
Flexible Exchange Rate System is also known as: |
A. | Pegged Exchange Rate System |
B. | Dirty Floating |
C. | Floating Exchange Rate |
D. | Both (b) and (c |
Answer» C. Floating Exchange Rate |
24. |
The rate which is determined by the government is known as: |
A. | flexible |
B. | fixed |
C. | floating exchange rate |
D. | none of these |
Answer» B. fixed |
25. |
The exchange rate at which demand for foreign currency becomes equal to its supply, is called |
A. | equal rate of exchange |
B. | mint parity |
C. | equilibrium exchange rate |
D. | all of these |
Answer» C. equilibrium exchange rate |
26. |
Demand for foreign currency depends upon: |
A. | repayment of international loans |
B. | investment in rest of the world |
C. | direct foreign investment in the domestic economy |
D. | both (a) and (b |
Answer» D. both (a) and (b |
27. |
In a flexile exchange rate regime |
A. | central government control the rate |
B. | state government control the rate |
C. | government do not have any intervention |
D. | central bank control the rate |
Answer» C. government do not have any intervention |
28. |
Foreign exchange transactions involve monetary transactions |
A. | among residents of the same country |
B. | between residents of two countries only |
C. | between residents of two or more countries |
D. | among residents of at least three countries |
Answer» B. between residents of two countries only |
29. |
Paper currency was used for internal use and gold was used for international settlement under standard |
A. | IMF |
B. | gold bullion |
C. | fixed |
D. | floating |
Answer» B. gold bullion |
30. |
A foreign currency account maintained by a bank abroad is its |
A. | nostro account |
B. | vostro account |
C. | loro account |
D. | foreign bank account |
Answer» A. nostro account |
31. |
The statutory basis for administration of foreign exchange in India is |
A. | Foreign Exchange Regulation Act, 1973 |
B. | Conservation of foreign Exchange and Prevention of Smuggling Act. |
C. | Foreign Exchange Management Act, 1999 |
D. | Exchange Control Manual |
Answer» C. Foreign Exchange Management Act, 1999 |
32. |
The market forces influencing the exchange rate are not fully operational under |
A. | floating exchange rate system |
B. | speculative attack on the market |
C. | fixed exchange rate system |
D. | current regulations of IMF |
Answer» C. fixed exchange rate system |
33. |
According managed to classification by IMF, the currency system of India falls under |
A. | Managed flating |
B. | independently floating |
C. | crawling peg |
D. | pegged to basket of currencies |
Answer» A. Managed flating |
34. |
Under fixed exchange rate system, the currency rate in the market is maintained through |
A. | official intervention |
B. | rationing of foreign exchange |
C. | centralising all foreign exchange operations with central bank of the country |
D. | none of the above |
Answer» A. official intervention |
35. |
Euro was launched on |
A. | 1999 |
B. | 2000 |
C. | 2002 |
D. | 2004 |
Answer» A. 1999 |
36. |
Indirect rate of exchange is quoted in India for - |
A. | sale of foreign travellers cheque |
B. | sale of rupee travellers cheques |
C. | purchase of personal cheques |
D. | none of the above |
Answer» D. none of the above |
37. |
A transaction in which the currencies to be exchanged the next day of the transaction is known as |
A. | ready transaction |
B. | value today |
C. | spot transactions |
D. | Value tomorrow |
Answer» D. Value tomorrow |
38. |
The transaction in which the exchange of currencies takes place at a specified future date, subsequent to the spot date is known as a |
A. | swap transaction |
B. | forward transaction |
C. | future transaction |
D. | non-deliverable forwards |
Answer» B. forward transaction |
39. |
The buying rate is also known as the |
A. | bid rate |
B. | offer rate |
C. | spread |
D. | swap |
Answer» A. bid rate |
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