Question : The real exchange rate is a measure of:

Option 1: Purchasing power of one currency relative to another.
 

Option 2: Exchange rate fluctuations in the short term.
 

Option 3: The value of a currency in terms of gold.

Option 4: Speculative movements in the foreign exchange market.

Question : What is the meaning of exchange rate?

Option 1: Quantum of domestic currency needed to pay for foreign currency
 

Option 2: Quantum of foreign currency needed to pay for another foreign currency
 

Option 3: Rate at which foreign currency is bought and sold

Option 4: All of these

Question : A country's central bank can intervene in the foreign exchange market to influence the value of its currency. This is known as ________.

Option 1: exchange rate targeting
 

Option 2: currency manipulation
 

Option 3: foreign exchange intervention

Option 4: exchange rate pegging

Question : What is the primary function of the foreign exchange market?

Option 1: Facilitating international trade
 

Option 2: Setting interest rates
 

Option 3: Regulating stock markets

Option 4: Controlling inflation rates

Question : Which of the following steps should taken by the central bank if there is excessive rise in the foreign exchange rate?

Option 1: Supply foreign exchange from its stock
 

Option 2: Demand more of other foreign exchange
 

Option 3: Not intervene in the market as exchange rate is determined by the market forces

Option 4: Help central government to stabilize foreign exchange rate