Fundamental Analysis in Forex MCQs
MCQs on Fundamental Analysis in Forex
1. What is fundamental analysis in Forex trading?
A) A method of analyzing past price movements
B) A technique for evaluating currencies based on economic, financial, and political factors
C) A strategy to determine entry and exit points based on chart patterns
D) A way to analyze technical indicators
Answer: B) A technique for evaluating currencies based on economic, financial, and political factors
2. Which of the following is NOT a key economic indicator used in fundamental analysis?
A) Gross Domestic Product (GDP)
B) Unemployment rate
C) Moving averages
D) Consumer Price Index (CPI)
Answer: C) Moving averages
3. What does the interest rate affect in Forex trading?
A) Only the price of commodities
B) Currency strength and economic growth
C) The number of technical indicators available
D) Stock market trends
Answer: B) Currency strength and economic growth
4. What is the purpose of analyzing GDP in fundamental analysis?
A) To determine market trends
B) To assess the overall economic health and growth of a country
C) To predict short-term price movements
D) To evaluate technical indicators
Answer: B) To assess the overall economic health and growth of a country
5. What impact does high inflation have on a currency?
A) It strengthens the currency
B) It has no impact
C) It can weaken the currency due to decreased purchasing power
D) It makes the currency more stable
Answer: C) It can weaken the currency due to decreased purchasing power
6. Which organization is primarily responsible for setting interest rates in a country?
A) International Monetary Fund (IMF)
B) World Bank
C) Central Bank
D) Stock Exchange
Answer: C) Central Bank
7. What is the significance of political stability in fundamental analysis?
A) It has no effect on currency value
B) It can lead to increased investor confidence and stronger currency value
C) It only affects stock markets
D) It determines technical analysis strategies
Answer: B) It can lead to increased investor confidence and stronger currency value
8. What are “economic calendars” used for in fundamental analysis?
A) To track technical indicators
B) To predict market volatility
C) To schedule trading sessions
D) To keep track of upcoming economic events and data releases
Answer: D) To keep track of upcoming economic events and data releases
9. Which of the following events can lead to currency volatility?
A) Regular economic reports
B) Sudden political changes
C) Predictable interest rate adjustments
D) Stable economic growth
Answer: B) Sudden political changes
10. What does a positive trade balance indicate?
A) The country is importing more than exporting
B) The country is exporting more than importing
C) The country has no trade agreements
D) The country is experiencing economic recession
Answer: B) The country is exporting more than importing