What Is a Fixed Exchange Rate

question 2

Multiple Choice

What is a fixed exchange rate?

• A)A monetary system in which the exchange rates of major currencies retain nearly the same value with respect to the U.S.dollar but are allowed to fluctuate during crises.
• B)A monetary system in which the exchange rates of currencies are set at a permanent price of another currency or a precious metal.
• C)A monetary system in which the exchange rates of major currencies retain nearly the same value with respect to gold but are periodically adjusted in response to currency crises.
• D)A monetary system in which exchange rates are allowed to change according to their market price.
• E)A trading system in which governments limit how many goods can be sent between countries.

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Definitions:

DAX

A blue chip stock market index consisting of the 40 major German companies trading on the Frankfurt Stock Exchange.

FTSE

An acronym for the Financial Times Stock Exchange, which refers to several major stock market indices, such as the FTSE 100, tracking the performance of the largest public companies by market capitalization in the UK.

Nikkei

A stock market index for the Tokyo Stock Exchange, often used to gauge the performance of the Japanese economy.

Futures Contract

A legal agreement to buy or sell a particular commodity or asset at a predetermined price at a specified time in the future.