IMS 3310 EXAM 2 CHAPTER 7

6. If central bankers raise interest rates to curb inflation, they risk driving currency ___. If their interventions in the foreign exchange market drive the currency ____ they may boost inflation.

Up, Down

7. A country experiencing a current account surplus will see its currency ______,while a country experiencing a current account deficit will see its currency _____.

Appreciate, Depreciate

8. Traders and investors trading in a forward transaction market are most concerned about:

Change in the spot rate