Practice Exam Questions
Fixed versus Floating Exchange Rates (MCQ Revision Question)
- Level:
- AS, A-Level, IB
- Board:
- AQA, Edexcel, OCR, IB, Eduqas, WJEC
Last updated 10 Jun 2017
When might a fixed exchange rate be preferred to a floating currency? This MCQ tests student understanding of this important topic.
Wrong options
A: Floating exchange rate provides partial auto-correction of a trade deficit
B: With fixed exchange rate, interest rates set to maintain currency stability not growth
C: Maintaining a fixed exchange rate requires the central bank to hold larger amounts of foreign currency reserves to intervene in the currency market if needed
You might also like
![](https://tutor2u-net.imgix.net/user-photos/eventhost-RuthTarrant.png?auto=compress%2Cformat&crop=focalpoint&fit=crop&fp-x=0.5&fp-y=0.5&h=100&q=80&w=100)
Why might the US raise its interest rate?
14th December 2015
![](https://tutor2u-net.imgix.net/user-photos/gbr_profile.jpg?auto=compress%2Cformat&crop=focalpoint&fit=crop&fp-x=0.5&fp-y=0.5&h=100&q=80&w=100)
Currencies: How sustainable is the riyal/dollar peg?
14th January 2016
Floating Exchange Rates (MCQ Revision Question)
Topic Videos
Introduction to Monetary Policy (Online Lesson)
Online Lessons
![](https://tutor2u-net.imgix.net/user-photos/graham-watson.png?auto=compress%2Cformat&crop=focalpoint&fit=crop&fp-x=0.5&fp-y=0.5&h=100&q=80&w=100)
African Economy - Weak Currencies Drive Up the Cost of Living
15th November 2023