When an Exchange Rate Is Determined Strictly by the Demands

question 17

Multiple Choice

When an exchange rate is determined strictly by the demands and supplies for a nation's currency, it is called:

• A) fixed.
• B) arbitrage.
• C) floating.
• D) unilateral.
• E) balance of payments.

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Definitions:

Municipal Bond

A debt security issued by a state, municipality, or county to finance its capital expenditures.

Corporate Bond

A debt security issued by a corporation to raise capital, whereby the issuer promises to repay the principal along with interest at specified dates.

Tax Bracket

A range of incomes taxed at a specific rate, with different portions of income being taxed at progressively higher rates as income increases.

Collateral

An asset that a borrower offers to a lender as security for a loan, which can be seized if the borrower fails to repay the loan.