The Foreign Exchange Market Serves Two Main Functions

question 37

Multiple Choice

The foreign exchange market serves two main functions.These are:

• A)collect duties on imported products and convert the currency of one country into the currency of another.
• B)insure companies against foreign exchange risk and set interest rates charged to foreign investors.
• C)collect duties on imported products and set interest rates charged to foreign investors.
• D)convert the currency of one country into the currency of another and provide some insurance against foreign exchange risk.

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Definitions:

Inelastic Supply

Describes a situation where the quantity supplied of a good or service is relatively unresponsive to changes in its price.

Consumers Of Food

Individuals or entities that ingest food products for nourishment and energy.

Excise Tax

A tax imposed on specific goods, such as tobacco and alcohol, typically gauged per unit.

Downward-Sloping Demand

The typical relationship between price and quantity demanded, indicating that as price decreases, demand usually increases.