Four Instruments Are Available to Borrowers and Investors to Protect

question 32

Multiple Choice

Four instruments are available to borrowers and investors to protect against adverse foreign-exchange rate movements including ________.

• A) currency forward contracts and currency futures contracts.
• B) currency forward contracts but not currency swaps.
• C) currency futures contracts but not currency options.
• D) currency options but not currency swaps.

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Definitions:

Labor Unions

Labor Unions are organizations formed by workers from related fields that work for the common interest of its members in terms of wages, benefits, and working conditions.

Foreign Purchases Effect

The impact on domestic currency and the balance of trade when residents of a country purchase foreign-made goods and services.

American Exports

Goods and services produced in the United States and sold to other countries, contributing to the country’s GDP and trade balance.

Macroeconomic Equilibrium

A state in which aggregate supply equals aggregate demand, leading to an equilibrium level of prices and output in the economy.