Under a System of Floating Exchange Rates, Changes in the Value

question 89

Multiple Choice

Under a system of floating exchange rates, changes in the value of the U.S. dollar relative to other currencies are the result of

• A) negotiated rate adjustments between the U.S. government and the World Trade Organization.
• B) decisions made by the Federal Reserve Board of Governors in order to implement monetary policy.
• C) fluctuations in the world price of gold.
• D) changes in the supply of and/or demand for dollars in the global currency market.

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Definitions:

Non-negotiable Instrument

A document or contract that cannot be transferred or assigned from one person to another in a way that the receiver obtains the legal right to it.

Holder in Due Course

A party that has acquired a negotiable instrument in good faith and for consideration, thereby obtaining certain rights free of many defenses available to the original parties.

Checks

Checks are written, dated, and signed instruments that direct a bank to pay a specific amount of money from the writer's account to the person or entity in whose name the check has been issued.

Deposits

Funds placed into an account at a financial institution for safekeeping, which can be used for transactions or as savings.