3. International Economics
Exchange Rates — Quiz
Test your understanding of exchange rates with 5 practice questions.
Practice Questions
Question 1
Which of the following describes the role of a central bank in maintaining a fixed exchange rate?
Question 2
If a country's currency depreciates, what is the immediate impact on the price of its exports in foreign currency terms?
Question 3
What is the primary mechanism through which speculation can influence exchange rates in a floating system?
Question 4
Which of the following is a potential disadvantage of a fixed exchange rate system?
Question 5
If the exchange rate between the US Dollar ($\text{USD}$) and the Canadian Dollar ($\text{CAD}$) is $\text{1 USD} = \text{1.30 CAD}$, and a Canadian car costs $\text{39,000 CAD}$, what is its cost in US Dollars?