According to Historical Data, What Is the Effect of a Sharp

question 86

Multiple Choice

According to historical data, what is the effect of a sharp change in the current account on the exchange rate (both in the short and long run) ?

• A) At first, home currency will depreciate as CA balance falls, but over time, currency will begin to depreciate.
• B) At first, home currency will appreciate as CA balance falls, but over time, currency will begin to depreciate.
• C) At first, home currency will appreciate as CA balance rises, but over time, currency will begin to depreciate.
• D) At first, home currency will depreciate as CA balance falls, but over time, currency will begin to appreciate.
• E) At first, home currency will appreciate as CA balance falls, but over time, currency will begin to appreciate.

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Definitions:

Feedback Control

A process where outputs are monitored and used to make adjustments to inputs or processes to achieve desired outcomes.

Quality

The degree to which a product or service meets or exceeds customer expectations.

Variety

The presence of multiple different elements or options within a certain context, providing a range of choices.

Reactive Controls

Management techniques that respond to problems or situations as they arise rather than anticipating them and acting in advance.