Which one of the following statements is true regarding exchange rates in the flexible exchange rate system? Select one: O A. Starting at the short-term equilibrium, if the market expects that country A's currency would appreciate in the future, then the demand for country's A currency would decrease. O B. Exchange rates should always be at the long-run equilibrium which satisfies the purchasing power parity. OC. Exchange rates are unpredictable because they are simultaneously influenced by long-run, medium run, and short-run factors. O D. Interest rate arbitragers broaden the short-term dis-equilibrium.
Which one of the following statements is true regarding exchange rates in the flexible exchange rate system? Select one: O A. Starting at the short-term equilibrium, if the market expects that country A's currency would appreciate in the future, then the demand for country's A currency would decrease. O B. Exchange rates should always be at the long-run equilibrium which satisfies the purchasing power parity. OC. Exchange rates are unpredictable because they are simultaneously influenced by long-run, medium run, and short-run factors. O D. Interest rate arbitragers broaden the short-term dis-equilibrium.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Which one of the following statements is true regarding exchange rates in the flexible exchange rate system?
Select one:
O A.
Starting at the short-term equilibrium, if the market expects that country A's currency would appreciate in the future, then the demand
for country's A currency would decrease.
Ов.
Exchange rates should always be at the long-run equilibrium which satisfies the purchasing power parity.
Oc.
Exchange rates are unpredictable because they are simultaneously influenced by long-run, medium run, and short-run factors.
OD.
Interest rate arbitragers broaden the short-term dis-equilibrium.
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