Which of the Following Is a Function of the Foreign

question 25

Multiple Choice

Which of the following is a function of the foreign exchange market?

• A)To provide some insurance against foreign exchange risk
• B)To protect short-term cash flow from adverse changes in exchange rates
• C)To eliminate volatile changes in exchange rates
• D)To reduce the economic exposure of a firm
• E)To enable companies to engage in capital flight when countertrade is not possible

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Definitions:

Federal Budget

The government’s estimation of revenue and spending for a forthcoming fiscal year that includes allocations of funds to various federal departments and agencies.

Defense Spending

Government expenditure on military forces and activities, including salaries, equipment, construction, and research and development.

Means of Production

The facilities, resources, and tools used to produce goods and services in an economy, often discussed in Marxist economic theories.

Economic Role

The function or position that an entity (such as an individual, firm, or government) plays within the larger economic system.