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:

Multicellularity

The condition of an organism being composed of more than one cell, which allows for the differentiation of cells into specialized types and forms.

Billion Years

A unit of time equal to 1,000 million years, often used in geology, astronomy, and describing the age and evolution of the Earth and universe.

Millipede

A class of invertebrates characterized by having two pairs of jointed legs on most body segments, known for their slow movement and detritivorous diet.

Tetrapod

Vertebrate animals having four limbs or limb-like appendages, including amphibians, reptiles, birds, and mammals, as well as their extinct ancestors.