Question : What is the term used to describe a situation where a country's central bank fixes the value of its currency to another currency at a specified exchange rate?
Option 1: Currency intervention
Option 2: Currency hedging
Option 3: Currency manipulation
Option 4: Currency pegging
Correct Answer: Currency pegging
Solution : The correct answer is d) Currency pegging
Currency pegging refers to a situation where a country's central bank or monetary authority fixes the value of its currency to another currency, often a major currency like the US dollar or the euro, at a specified exchange rate. The purpose of currency pegging is to maintain stability in the exchange rate and provide a predictable environment for international trade and investment. The central bank intervenes in the foreign exchange market as needed to ensure that the currency remains within the specified exchange rate range.
Question : What is the term used to describe a situation where a country's central bank actively buys or sells its own currency in the foreign exchange market to influence its value?
Option 1: Currency manipulation
Option 2: Currency pegging
Option 3: Currency arbitrage
Option 4: Currency intervention
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 term used to describe the buying and selling of currencies with the expectation of making a profit from exchange rate fluctuations?
Option 1: Currency hedging
Option 2: Currency speculation
Question : What is the term used to describe the rate at which a central bank buys or sells its own currency in the foreign exchange market?
Option 1: Spot exchange rate
Option 2: Nominal exchange rate
Option 3: Intervention exchange rate
Option 4: Forward exchange rate
Question : What is the term used to describe the practice of a country manipulating its currency to gain an unfair trade advantage?
Option 3: Currency pegging
Option 4: Currency manipulation
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