The Forward Exchange Rate

question 33

Multiple Choice

The forward exchange rate:

• A)Is the rate at which Foreign Exchange Basics dealers are willing to commit to buying or selling a currency in the future
• B)Is a synonymous term for the nominal exchange rate
• C)Is the same as the spot rate
• D)Is always above the spot rate since it carries greater risk

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Definitions:

Derived Demand

Refers to the demand for a good or service that results from the demand for another good or service.

Productive Resource

Assets, materials, or inputs used in the production of goods and services, including labor, capital, and natural resources.

Factor Demand

The demand for production inputs (such as labor, land, and capital) by firms, determined by their need to produce goods and services.

Wage Rate

indicates the amount of money paid per unit of time worked, typically per hour or year, influencing labor costs and economic decisions.