Which of the Following Is Not True Regarding "Exchange Rate

question 18

Multiple Choice

Which of the following is not true regarding "exchange rate indexes?"

• A)They will all show the same general trends (i.e., appreciation or depreciation).
• B)Neither economic theory nor practice gives a clear indication of which exchange rate is best.
• C)For short-term movements, there can be large differences across exchange rate indexes.
• D)Exchange rate indexes are used to measure the average value of a currency relative to several other currencies.

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Definitions:

Financial Cooperatives

Member-owned financial institutions that provide savings, credit and other financial services to their members.

Commercial Banks

Commercial banks are financial institutions that accept deposits, offer checking account services, and make loans to individuals and businesses.

Horizontal Merger

A business consolidation that occurs between two firms that operate in the same industry, often aimed at increasing market share and reducing competition.

Conglomerate Merger

A type of merger where two companies that operate in entirely different industries combine resources or operations.