Quiz

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1. Weighted average of the price of one currency in relation to other is:

Real Exchange rate
Nominal Exchange rate
Nominal Effective Exchange rate

Real Effective Exchange rate

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2. A decrease in the value of one currency in relation to other is termed as:

Depreciation

Appreciation
Sterilization
None of the above
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3. Exchange Rate aims at:

Sales and purchase of foreign currencies
Currency of one country converted in to currency of other country
Methods and mechanisms to make international payments

All the above

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4. Central bank intervene to determine the exchange rate stability with respect to
domestic currency is:
Fixed rate

Flexible rate
Dirty Floating
Clean Floating
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5. A rise in value of a currency in relation to other is termed as:

Revaluation

Devaluation
Currency Overvaluation
Currency Undervaluation
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6. When the exchange rate valued by central bank is lower than the market
determined rate, it is termed as:

Currency Undervaluation

Currency Overvaluation
Revaluation
Devaluation
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7. Which of the following will affect exchange rate?

Demand & Supply of Foreign currencies
Political conditions
Currency conditions
All of the above
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8. When central bank sells foreign exchange in the market, it leads to

currency..
Appreciation
Depreciation

Currency Overvaluation
Currency Undervaluation

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9. When central bank purchases foreign exchange from the market, then
money supply will
Increase

Decrease
No change
None of the above