1 . Which of the following would NOT be a valuable Eurocurrency market transaction?

A) Ford Motor Company holds temporary excess dollars in a London bank.

B) Dell Computer borrows dollars from a German bank to fund accounts receivable.

C) Volkswagen borrows Euros in France to finance working capital.

D) A Russian oil firm deposits dollars in a Russian bank in London.

2. The drop in value of a currency pegged to gold or another currency is known as ________.

A) revaluation

B) depreciation

C) deterioration

D) devaluation

3 . A currency that has increased in foreign exchange value relative to a floating rate currency has ________.

A) revalued

B) violated international trade agreements

C) appreciated

D) deteriorated

4. Based on the premise that, other things equal, countries would prefer a fixed exchange rate: Variable rates provide stability in international prices for the conduct of trade.

A) True

B) False

5. Based on the premise that, other things equal, countries would prefer a fixed exchange rate, which of the following statements is NOT true?

A) Fixed rates provide stability in international prices for the conduct of trade.

B) Fixed exchange rate regimes necessitate that central banks maintain large quantities of international reserves for use in the occasional defense of the fixed rate.

C) Fixed rates are inherently inflationary in that they require the country to follow loose monetary and fiscal policies.

D) Stable prices aid in the growth of international trade and lessen exchange rate risks for businesses.