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This set of Business Economics Multiple Choice Questions & Answers (MCQs) focuses on Business Economics Set 13
Q1 | In a system of managed float there is less chance of speculation.
- flexible
- managed float
- fixed
- restictive
Q2 | __ is done to overcome uncertainties.
- Arbitrage
- Hedging
- speculation
- locking
Q3 | _ is the opposite of hedging.
- Arbitrage
- locking
- speculation
- blocking
Q4 | The modern foreign exchange market functions in a system of _ .
- Fixed exchange rate
- Gold standard
- Britton Wood system
- Floating exchange rate
Q5 | Pick out the feature which is not true of the foreign exchange market.
- Buying and selling of currencies
- Largest market
- High liquidity
- Existence of a central market place
Q6 | In the determination of the exchange value of a currency, the first currency of a currency pair is called _ .
- Price currency
- Hard currency
- Base currency
- bitcoin
Q7 | The currency used for international transactions irrespective of the importing or exporting country’s currency is called _ .
- Soft currency
- Bitcoin
- Vehicle currency
- value currency
Q8 | Pick out the feature which is not true of the foreign exchange market.
- It is open 24 hours a day
- Not one single entity can control the market
- Huge market
- It has limited geographical dispersion
Q9 | _ enables an investor to earn high returns while minimizing capital risks.
- Liquidity
- Reserves
- Returns
- Leverage
Q10 | Trading in foreign exchange has become fast and simple due to _ .
- Simple procedures
- Geographical proximity
- Improved technology
- Bullet trains
Q11 | Pick out the feature which is not true of the foreign exchange market.
- Huge trading volumes
- Operates throughout the week
- Presence of a risk element
- Leverage enables to make profit
Q12 | The provision of foreign bills of exchange in international payments in an example of _ .
- Transfer function
- Credit function
- Speculation
- None of the above
Q13 | Transaction where the exchange of currencies take place on the same date is known as
- swap transaction
- ready transaction
- spot transaction
- value tomorrow
Q14 | Transaction in which exchange of currencies take place at a specified future date, subsequent to spot date is known as,
- swap transaction
- forward transaction
- future transaction
- non-deliverable forwards
Q15 | Transaction in which currencies to be exchanged the next day of the transaction is known as
- value today
- ready transaction
- spot transaction
- value tomorrow
Q16 | According to the Purchasing Power Parity theory, the rate of exchange between the currencies of two countries is determined by_
- their relative price levels
- their import and export volumes
- their import and export values
- their relative capital movements
Q17 | Which of the following is not an assumption of the Purchasing Power Paritytheory? _
- There are no trade barriers between countries
- The price index for each of the two countries must be comprised of the same basket of goods
- All the prices should be indexed to the same year
- Changes in the exchange rate changes internal price level
Q18 | Exchange rate between two currencies is based on _ __
- purchasing power of two currencies
- economic development of the two nation
- political stability in the two countries
- export - import in two countries
Q19 | Purchasing Power Parity Theory considers that goods in different countries are _
- differential
- identical
- superior
- inferior
Q20 | Under IMF, the exchange rate system was _
- gold standard
- currency board system
- dollarization
- EURO
Q21 | Under managed float, the central bank of a nation intervenes to_ _ foreign currency.
- only purchase
- only sell
- purchase and sell
- auction
Q22 | Flexible exchange rate system, the exchange rate is determined by _
- Market forces
- Central Bank
- commercial bank
- Scheduled Bank
Q23 | India has adipted _ _ _ Exchange rate system.
- Fixed
- Flexible
- Managed
- Stable