81. What is the role of the International Monetary Fund (IMF) in Forex Management?
a. It provides loans to countries facing balance of payments difficulties
b. It determines global exchange rates
c. It regulates capital flows between countries
d. It manages Forex Reserves on behalf of member countries
82. What is the purpose of an exchange rate regime?
a. To regulate foreign exchange transactions in a country
b. To determine the value of a country’s currency relative to other currencies
c. To promote international trade and investment
d. To prevent currency speculation
83. What is a freely floating exchange rate regime?
a. It allows the exchange rate to be determined by market forces without intervention
b. It pegs the domestic currency to a fixed value against a major international currency
c. It fixes the exchange rate within a narrow band and allows limited fluctuations
d. It controls the exchange rate through active intervention by the central bank
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84. Which of the following exchange rate regimes provides the highest level of exchange rate stability?
a. Freely floating exchange rate regime
b. Fixed exchange rate regime
c. Managed floating exchange rate regime
d. Pegged exchange rate regime
85. What is a devaluation of the domestic currency?
a. It increases the value of the domestic currency relative to other currencies
b. It decreases the value of the domestic currency relative to other currencies
c. It eliminates the exchange rate risk associated with the domestic currency
d. It stabilizes the domestic economy by reducing inflation
