Exchange Rates & Balance of Payments
Topic 4: Exchange Rates & Balance of Payments - Multiple Choice Exercise
Choose the correct answer for each question in the quiz
The exchange rate of the Euro in terms of the US Dollar is currently:
- At parity.
- Below parity.
- Above parity.
- Undefined.
If in September 2014, €1 = $1.2962, a good costing €45 would have a Dollar price of:
- $59.52.
- $58.33.
- $34.72.
- $35.72.
An appreciation of the currency is likely to occur if:
- Domestic interest rates fall.
- There is an increase in demand for imports.
- There is an increase in demand for exports.
- There is an increase in the balance of payments deficit.
In a flexible exchange rate system:
- The government intervenes to influence the exchange rate.
- The exchange rate should adjust to equate the supply and demand of the currency.
- The Balance of Payments should always be in surplus.
- The Balance of payments will always equal the government budget.
A depreciation of a currency occurs when:
- The value of the currency falls.
- The value of the currency increases.
- Inflation falls.
- The balance of payments improves.
Which of the following statements is true?
- Poland, Denmark and Sweden currently do not use the Euro.
- England, Poland and Portugal currently do not use the Euro.
- England, Sweden and Malta currently do not use the Euro.
- England, Greece and Cyprus currently do not use the Euro.
If the value of the Euro in other currencies is strong, then other things being equal:
- The price of Irish products abroad in foreign currency will fall.
- The price of Irish products abroad in foreign currency will rise.
- The price of Irish products in Ireland will rise.
- None fo the above.
Which exchange rate is nearest the launch rate for the Euro against the Dollar?
- Parity.
- Euro equals $1.18.
- Euro equals $1.05.
- Euro equals $1.24.
The balance of payments equals:
- The difference between household spending and income.
- The difference between government spending and income.
- A measure of the economic transactions between Irish residents and the rest of the world.
- The difference between inflation and unemployment.
Which of the following accounts are included in the calculation of Balance of Payments?
- Financial Account, Savings Account, Capital Account.
- Savings Account, Current Account, Financial Account.
- Financial Account, Current Account, Capital Account.
- Capital Account, Current Account, Savings Account.
