In the Long Run, the Nominal Exchange Rate

question 382

Multiple Choice

In the long run, the nominal exchange rate

• A) is not related to the real exchange rate, since the real exchange rate is the true value of currencies.
• B) is a monetary phenomenon, determined by the quantities of money in two countries.
• C) will not change if prices in one country change, since prices are nominal variables.
• D) is fixed by world central banks, as indicated by the fixed exchange rate system.

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Definitions:

Normal Balance

The side (debit or credit) on which increases to the account are recorded, depending on the type of account.

Financial Statement(s)

Formal records of the financial activities and position of a business, person, or other entity, presented in a structured manner.

Normal Balance

The side of an account (debit or credit) where increases in the account are recorded.

Financial Statement(s)

Documents that provide an overview of a business's financial condition, including balance sheet, income statement, and cash flow statement.