A Random Walk Model Can More Accurately Predict Exchange Rates

question 26

Multiple Choice

A random walk model can more accurately predict exchange rates as compared to a sophisticated forecast

• A) always.
• B) for forecasts up to a year away.
• C) for forecasts longer than a year away.
• D) never.
• E) because of the predictability of exchange rates.

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Definitions:

General Equilibrium

A condition in economics where supply and demand are balanced across all markets in the economy simultaneously.

Supply Curve

A graphical representation of the relationship between the price of a good or service and the quantity supplied for a given period.

Movie Tickets

Proof of purchase for entry to a cinema or theater showing, usually indicating a specific film, time, and seat assignment.

Demand Decrease

Demand decrease refers to a downward shift in the demand curve, indicating that consumers are willing to purchase less of a good at any given price.