The ________ Approach States That the Exchange Rate Is Determined

question 18

Multiple Choice

The ________ approach states that the exchange rate is determined by the supply and demand for national currency stocks, as well as the expected future levels and rates of growth of monetary stock.

• A) balance of payments
• B) monetary
• C) asset market
• D) law of one price

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Definitions:

Domestic Producers

Companies or individuals that produce goods and services within a country's borders, contributing to the domestic economy.

Terms of Trade

This concept measures the ratio of a country's export prices to its import prices, indicating the relative strength of its economy in the global market.

Equilibrium World Price

The price of an internationally traded product that equates the quantity of the product demanded by importers with the quantity of the product supplied by exporters; the price determined at the intersection of the export supply curve and the import demand curve.

Exports Supplied

Goods or services provided by one country to another in exchange for payment or trade.