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AP Macroeconomics Exchange Rates and International Capital Flows — practice questions

Explore 23 free Exchange Rates and International Capital Flows questions in AP Macroeconomics Economics. Open each question or exercise to read its content, reference answers and available explanation.

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Exchange Rates and International Capital Flows questions and exercises with answers

Showing questions 1–23 of 23.

A currency that strengthens against another is also said to:Read the answer and worked solution →A currency that weakens against another is also said to:Read the answer and worked solution →Exchange rates are described as tending to fluctuate:Read the answer and worked solution →Exchange rates are described as sometimes changing very:Read the answer and worked solution →From 2002 to 2008, the US dollar lost more than what share of its value?Read the answer and worked solution →A policy that allows the foreign exchange market to set exchange rates is called a:Read the answer and worked solution →Buying and selling goods or currencies across international borders at a profit is called:Read the answer and worked solution →When a government intervenes so the exchange rate differs from the market outcome, it establishes a:Read the answer and worked solution →A central bank is described as able to implement which two peg policies?Read the answer and worked solution →A hard peg policy is described as attempting to preserve a fixed exchange rate:Read the answer and worked solution →The dollar's 2002 to 2008 loss of value occurred in which markets?Read the answer and worked solution →The opening overview of foreign exchange markets covers their size and their main:Read the answer and worked solution →Alongside size and participants, the overview covers the vocabulary for discussing:Read the answer and worked solution →A currency that buys more foreign goods than it did last year has:Read the answer and worked solution →A country whose central bank never intervenes in currency markets operates which regime?Read the answer and worked solution →Arbitrage across borders is only profitable when the same item has prices that are:Read the answer and worked solution →A hard peg differs from a soft peg mainly in that the hard peg holds the rate:Read the answer and worked solution →The dollar losing a quarter of its value between 2002 and 2008 is an example of a currency that:Read the answer and worked solution →Pull the rope to appreciate or depreciateRead the answer and worked solution →Sort the exchange rate regimesRead the answer and worked solution →Judge the assertion and the reasonRead the answer and worked solution →Stack the exchange rate termsRead the answer and worked solution →Complete the currency rulesRead the answer and worked solution →

Worked practice questions

A currency that strengthens against another is also said to:

  1. Appreciate
  2. Depreciate
  3. Evaporate
  4. Consolidate
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Correct answer: A. Appreciate

1. Currency movements have two paired vocabularies. 2. Exchange rates fluctuate substantially between countries. 3. A currency that strengthens is said to appreciate. 4. One that weakens is said to depreciate. _Source: OpenStax Principles of Macroeconomics for AP Courses 2e (CC BY 4.0), Ch 15 'Exchange Rates and International Capital Flows'_

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A currency that weakens against another is also said to:

  1. Circulate
  2. Depreciate
  3. Appreciate
  4. Accumulate
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Correct answer: B. Depreciate

1. The second half of the pair describes a fall. 2. A strengthening currency appreciates. 3. A weakening currency is said to depreciate. 4. Both terms describe movements of exchange rates. _Source: OpenStax Principles of Macroeconomics for AP Courses 2e (CC BY 4.0), Ch 15 'Exchange Rates and International Capital Flows'_

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Exchange rates are described as tending to fluctuate:

  1. Substantially
  2. Never at all
  3. Only in wartime
  4. Only once a year
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Correct answer: A. Substantially

1. Currency values are not stable over time. 2. Exchange rates can sometimes change very swiftly. 3. Exchange rates tend to fluctuate substantially. 4. That holds even between bordering countries. _Source: OpenStax Principles of Macroeconomics for AP Courses 2e (CC BY 4.0), Ch 15 'Exchange Rates and International Capital Flows'_

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