Author Question: Why is the foreign exchange market so vital? What will be an ideal ... (Read 61 times)

jazziefee · **on:** Jun 30, 2018

Why is the foreign exchange market so vital?

What will be an ideal response?

Question 2

Before World War I, most countries belonged to a system of fixed exchange rates in which currencies were tied to which of the following assets?

A) The U.S. dollar
B) The British pound
C) Silver
D) Gold

nmyers · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

The foreign exchange market is the central component of the international capital market. The exchange rates it sets help determine the profitability of international transactions of all type. The exchange rates show valuable economic signals to households and firms involved in international trade and investment.

Answer to Question 2

D