The Exchange Rate Can Be Very Volatile, Yet the Quantity

question 125

Multiple Choice

The exchange rate can be very volatile, yet the quantity of dollars traded might not change much because

• A) there is only limited quantity of dollars in the foreign exchange market.
• B) the Fed is constantly intervening by buying and selling dollars.
• C) supply of dollars and the demand for dollars often change in opposite directions.
• D) supply of dollars and the demand for dollars often change in the same directions.
• E) both the demand curve for dollars and the supply curve of dollars are horizontal.

---

Definitions:

Financial Statement Components

The main parts of financial statements, including the balance sheet, income statement, statement of cash flows, and statement of changes in equity.

FASB

The Financial Accounting Standards Board, a private, non-profit organization that establishes financial accounting and reporting standards in the U.S.

Comprehensive Income

Comprehensive Income includes all changes in equity during a period except those resulting from investments by owners and distributions to owners.

IFRS

International Financial Reporting Standards, which is a set of accounting standards developed by the International Accounting Standards Board (IASB) that guide the preparation of financial statements globally.