1. An MNC has a contract for a relatively predictable long-term inflow of Japanese yen that the firm chooses to hedge by paying for imports from Canada in Japanese yen. This hedging strategy is known as

(a) a natural hedge

(b) Matching

(c) Diversification

(d) Swapping/switcing

2. More countries are adopting.............................. exchange rate system, especially as a number of emerging countries try to safeguard their currencies from increased volatility in foreign exchange markets triggered by monetary easing measures from the advanced countries . This system is equivalent to a middle ground between the floating system and the fixed system

(a) Crawling peg system

(b) Target zone

(c) Dirty float

(d) Controlled float system

3. From the "tequila crisis "of 1994-95, that originated in Mexico through the Russian/Brazilian crisis of 1997-1999 have led some observer to conclude that pegged exchange rate regime is inherently crisis-prone. Which crisis it is referring to

(a) Credit crunch

(b) Credit crisis

(c) Financial Crisis

(d) Currency crisis

4. China is facing the policy trilemma (impossible trinity) whereby it cannot have an open capital account, independent monetary policy and a fixed exchange rate at the same time. It has to choose two out of the three. It can either choose to have:

(a) A fixed exchange rate and an open capital account, giving up control of interest rates

(b) An open capital account and independent monetary policy, in which case it has to allow the exchange rate to be freely floating

(c) A fixed exchange rate and independent monetary policy, but maintaining a closed capital account

(d) all of the above

(e) any one of the above

(f) Other:___________