Which of the Following Is TRUE About Exchange Rates

question 18

Multiple Choice

Which of the following is TRUE about exchange rates?

• A) They should not be volatile because they will determine the economic climate.
• B) They are generally more volatile than stock prices.
• C) They are more volatile than several underlying factors that move them such as money supplies and fiscal variables.
• D) They should be volatile because to correct price signals they adjust quickly in response to economic news, but they are generally less volatile than stock prices.
• E) They never overreact to economic news.

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