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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Definitions:

Subject Matter

Refers to the topic, content, or substance of a legal case or document, which determines the jurisdiction and legal principles applicable.

Contract

An accord between several parties that carries legal weight and can be imposed by the law.

Voidable

A term referring to a contract or transaction that remains valid until one party decides to cancel or nullify it due to certain legal defenses.

Minor

An individual under the legal age of adulthood, which varies by jurisdiction but is commonly 18.