When the Exchange Rate Is Allowed to Adjust to Market

question 109

Multiple Choice

When the exchange rate is allowed to adjust to market forces, all of the following are true except one.Which is the exception?

• A)The foreign exchange market clears continually.
• B)The quantities of foreign exchange demanded and supplied are equal.
• C)The exchange rate will only change if the central bank alters the exchange rate.
• D)The exchange rate will remain constant until a change occurs in one of the factors that affect supply or demand.
• E)The forces of demand and supply determine the exchange rate.

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Definitions:

Relationship-Seeking Strategies

Plans of action that involve consciously making links between concepts or ideas that are not normally associated with each other.

Analytical Strategies

Approaches or methods used to break down complex information or data into manageable parts for better understanding, decision-making, or problem-solving.

Alertness

The state of being watchful and prompt to meet danger or emergencies, or to discover and take advantage of opportunities.

Opportunity Recognition

The process of identifying and assessing new possibilities for creating value or business.