In quoting exchange rates: Answer a. One should always quote these as units of foreign currency over a unit of domestic currency b. One should always quote the rate as the units of domestic currency over a unit of foreign currency c. Usually one should quote the rate in such a way that the value is greater than one d. Each country's central bank determines how the rate is to be quoted

In France a loaf of bread costs 3 euros. In Great Britain a loaf of bread costs 4 pounds. If the exchange rate is .9 pounds per euro, what is the real exchange rate? (explain the answer) a. 4/2.7 loaves of British bread per loaf of French bread b. 3.6/3 loaves of British bread per loaf of French bread c. 3/3.6 loaves of British bread per loaf of French bread d. 2.7/4 loaves of British bread per loaf of French bread

What is the effect of a devaluation of a domestic currency?     A) Domestic goods will become cheaper in terms of foreign currency, and consequently exports will decrease.   B) Domestic goods will become more expensive in terms of foreign currency, and consequently exports will decrease.   C) Domestic goods will become cheaper in terms of foreign currency, and consequently exports will increase.   D) Domestic goods will become more expensive in terms of foreign currency, and consequently exports will increase.

Compare and contrast the fixed, freely floating, and managed float exchange rate systems. What are some advantages and disadvantages of a freely float­ing exchange rate system versus a fixed exchange rate system?

Assume that there is a free-floating exchange rate. Interest rates rise in the UK, relative to those abroad. Discuss the effect that you would expect this to have on exchange rates. You should consider the effect on currency supply and demand, and illustrate your answer with a diagram. You should also consider how this relates to the concept of uncovered interest rate parity, and discuss this with the help of an equation.

Q3-20 In the economic and monetary union in Europe (EMU), the member countries Select one: a. tie their currencies to the US dollar. b. use a common currency (the euro). c. tie their currencies to the SDR. d. have completely flexible exchange rates with each other.