96. Which of the following statements is true regarding the relationship between Forex Reserves and trade balance?
a. Higher Forex Reserves are always associated with a trade surplus.
b. Higher Forex Reserves are always associated with a trade deficit.
c. Forex Reserves and the trade balance are not directly related.
d. Forex Reserves only depend on capital flows and not on the trade balance.
97. What is the purpose of a Current Account Convertibility?
a. To allow unrestricted movement of goods and services in and out of a country
b. To facilitate currency exchange for international travel and tourism
c. To attract foreign direct investment
d. To regulate the inflow and outflow of capital in a country
98. What does the term “Purchasing Power Parity” (PPP) refer to in Forex Management?
a. It is an exchange rate mechanism used to stabilize currency values.
b. It measures the relative purchasing power of different currencies.
c. It refers to the ability of a country to purchase foreign assets.
d. It determines the interest rate differential between two countries.
99. Which of the following is NOT a factor influencing the exchange rate in the long run?
a. Inflation levels
b. Interest rate differentials
c. Political stability
d. Short-term speculative activities
100. 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
