The Study of Exchange Rate Determination Is a Relatively New

question 7

Multiple Choice

The study of exchange rate determination is a relatively new part of international economics, since

• A) for much of the past century, exchange rates were fixed by government action.
• B) the calculations required for this were not possible before modern computers became available.
• C) economic theory developed by David Hume demonstrated that real exchange rates remain fixed over time.
• D) dynamic overshooting asset pricing models are a recent theoretical development.
• E) the exchange rate never fluctuates.

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