1. When was the Bretton Woods System, which established fixed exchange rates, established?
a) 1929
b) 1944
c) 1950
d) 1967
Answer: b) 1944
2. Which of the following was a major outcome of the Bretton Woods Agreement?
a) Creation of the World Bank and International Monetary Fund (IMF)
b) Introduction of the euro
c) Establishment of the Eurozone
d) Establishment of free-floating exchange rates
Answer: a) Creation of the World Bank and International Monetary Fund (IMF)
3. What does the term "foreign exchange" primarily refer to?
a) The trade of goods and services across borders
b) The conversion of one currency into another
c) The import and export of capital
d) International trade laws and regulations
Answer: b) The conversion of one currency into another
4. What is the primary purpose of a foreign exchange market?
a) To facilitate the global trading of commodities
b) To allow countries to exchange foreign currency
c) To manage global investments
d) To offer loans to foreign businesses
Answer: b) To allow countries to exchange foreign currency
5. Which of the following currencies is NOT part of the "major currencies" traded in global foreign exchange markets?
a) USD (United States Dollar)
b) EUR (Euro)
c) INR (Indian Rupee)
d) JPY (Japanese Yen)
Answer: c) INR (Indian Rupee)
6. When did India officially devalue the Indian Rupee (INR) for the first time in post-independence history?
a) 1947
b) 1966
c) 1991
d) 2000
Answer: b) 1966
7. Which of the following best describes the term "spot market" in the context of foreign exchange?
a) A market for long-term currency futures contracts
b) A market where currencies are bought and sold for immediate delivery
c) A market for commodities
d) A market for loans and foreign investments
Answer: b) A market where currencies are bought and sold for immediate delivery
8. Which organization is responsible for managing India's foreign exchange reserves?
a) Reserve Bank of India (RBI)
b) Ministry of Finance
c) Securities and Exchange Board of India (SEBI)
d) International Monetary Fund (IMF)
Answer: a) Reserve Bank of India (RBI)
9. What is the significance of the 'Indian Rupee' (INR) in the foreign exchange market?
a) It is pegged to the US Dollar
b) It is fully convertible on the international market
c) It is managed by the Reserve Bank of India with limited convertibility
d) It is a fixed exchange rate currency
Answer: c) It is managed by the Reserve Bank of India with limited convertibility
10. Which of the following is the main purpose of the Foreign Exchange Management Act (FEMA), 1999, in India?
a) To control the foreign currency exchange rates
b) To facilitate the smooth and efficient functioning of the foreign exchange market
c) To manage foreign exchange reserves
d) To control the inflation rate through exchange rate policies
Answer: b) To facilitate the smooth and efficient functioning of the foreign exchange market
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