Older MCQs might not have the typical A, B, C,
D
choices. They
have choices 1, 2, 3, and a combination of them is the answer. Below is the key that maps such
combinations to the answer.
A
1, 2 and 3 are correct
B
1 and 2 only are correct
C
2 and 3 only are correct
D
1 only is correct
Definition of foreign exchange rate. Determination of foreign exchange rate in foreign exchange market: Floating and fixed systems. Causes of foreign exchange rate fluctuations: Including changes in demand for exports and imports, changes in the rate of interest, speculation, and the entry or departure of MNCs. Consequences of foreign exchange rate fluctuations: The effects of foreign exchange rate fluctuations on export and import prices and spending on imports and exports via the PED. The difference between, and the advantages and disadvantages of, a floating foreign exchange rate and a fixed foreign exchange rate system.
Consequences of current account deficit and surplus: Impact on GDP, employment, inflation and foreign exchange rate.
