781. Under a system of floating exchange rates there is a general tendency for ?
A. exchange rates to be insensitive to the differential rates of inflation between countries
B. the currencies of relatively high-inflation countries to depreciate
C. the currencies of relatively high inflation countries to appreciate
D. the currencies of relatively low inflation countries to depreciate

782. Fiscal Policy refers to ?
A. The government regulation of financial intermediaries
B. The spending and taxing policies used by the government to influence the economy
C. The actions of the central bank in controlling the money supply
D. The government’s attitude to taxation

783. A depreciation of the dollar will have its most pronounced impact on imports if the demand for imports is ?
A. constant
B. inelastic
C. elastic
D. Unitary elastic

784. Which financial instrument provides a buyer the right to purchase or sell a fixed amount of currency at a prearranged price, within a few days to a couple of years ?
A. letter a credit
B. foreign currency option
C. cable transfer
D. bill of exchange

785. Speculators in foreign exchange markets do all of the following except ?
A. attempt to profit by trading on expectations about future currency prices
B. bear risk as they attempt to ____ beat the market||
C. attempt to buy currency at a low price and later resell that currency at a higher price
D. Simultaneously buy a currency at a low price and sell that currency at a higher price, making a riskless profit

786. Given the foreign currency market for the Swiss franc, the supply of franc slopes upward, because as the dollar price of the franc rises ?
A. America’s demand for Swiss merchandise rises
B. America’s demand for Swiss merchandise falls
C. Switzerland’s demand for American merchandise rises
D. Switzerland’s demand for American merchandise falls

787. Suppose there occurs an increase in the Canadian demand for Japanese computers This results in a (an) ?
A. increase in the demand for yen
B. decrease in the demand for yen
C. increase in the supply of yen
D. decrease in the Supply of yen

788. The reduction or covering of foreign exchange risk is called ?
A. hedging
B. speculation
C. intervention
D. arbitrage

789. The least common type of transaction in the foreign exchange is a ?
A. forward transaction
B. spot transaction
C. swap transaction
D. None of the above

790. The difference between bid (buying) rates and ask (selling) rates is called the ?
A. profit
B. arbitrage
C. spread
D. forward transaction


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