To prevent inflation caused by holding so much foreign currency, China must
A. Allow the yuan to float with supply and demand and cause it to depreciate.
B. Allow the dollar to float.
C. Allow a floating yuan to cause it to appreciate.
D. Fix its exchange rate lower.
Answer: C
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The term "barter" is used to refer to
In an agreement to exchange dollars for euros in three months at a price of $0.90 per euro, the price is the
A) spot exchange rate. B) money exchange rate. C) forward exchange rate. D) fixed exchange rate.
Financial capital is
A) the collection of stock and bond exchanges around the country. B) funds used to purchase capital goods. C) the foreign exchange market. D) assets of financial institutions.
A Swiss consumer wants to buy an American laptop. The exchange rate is 1USD=0.89CHF (Swiss Francs). The laptop costs $800 . How much would the laptop cost him in Swiss Francs?
a. 1200 Francs b. 1160Francs c. 890Francs d. 712 Francs