Test 5 of 9
Short answers question:
1-Briefly describe the three main institutions of the foreign exchange market.
2- What is the foreign exchange market? Explain why investors use this market.
3- Briefly describe how exchange rates influence business activities.
4- Briefly describe any two of the three main components of the international capital market.
5- Explain how exchange rates adjust to inflation.
6- Explain how a pegged exchange-rate system works. Why would a country choose to follow this system?
7- Describe the purposes of the international capital market. What factors account for its rapid growth?
8- Describe the most important features of the international monetary system created by the Bretton Woods Agreement.
Discuss how exchange rates influence international business activities. (one paragraph or two)