The Monetary Approach Makes the General Prediction That

question 32

Multiple Choice

The monetary approach makes the general prediction that

• A) the exchange rate, which is the relative price of American and European money, is fully determined in the long run by the relative supplies of those monies.
• B) the exchange rate, which is the relative price of American and European money, is fully determined in the short run by the relative supplies of those monies and the relative demands for them.
• C) the exchange rate, which is the relative price of American and European money, is fully determined in the short run and long run by the relative supplies of those monies and the relative demands for them.
• D) the exchange rate, which is the relative price of American and European money, is fully determined in the long run by the relative supplies of those monies and the relative demands for them.
• E) the money supply in the U.S. will adjust to European monetary equilibrium.

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