Which of the Following Factors Affects the Exchange Rate in the Short

question 67

Multiple Choice

Which of the following factors affects the exchange rate in the short run but not the long run?

• A) domestic interest rate
• B) relative expected trade barriers
• C) relative import demand
• D) They all affect the short and long run exchange rate.

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Definitions:

NPV Analysis

A method of calculating the present value of an investment's expected cash flows minus the initial investment cost to assess profitability.

Externalities

The unintended positive or negative consequences of an economic activity on unrelated third parties.

Greenhouse Gas Emissions

The release of gases into the atmosphere that trap heat, leading to global warming and climate change.

Dissipation Rate

The rate at which an economic benefit is eroded or diminished over time, often used in environmental economics and resource management.