41. 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.
42. 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
43. 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.
44. 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
45. 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.
