In a Floating Exchange Rate Regime,the Exchange Rate Is the Equilibrium

question 69

Multiple Choice

In a floating exchange rate regime,the exchange rate is the equilibrium price of the currency.Changes in demand for a currency will cause changes in the equilibrium exchange rate.Which of these statements in relation to the AUD demand curve in the FX market is incorrect?

• A) The purchase of AUD goods, services or assets generates a demand for AUD.
• B) A depreciation of the AUD equates to a fall in the price of Australian goods, services and assets.
• C) The demand curve is downward-sloping; as the price of the AUD increases the demand for the AUD also increases.
• D) A fall in the cost of Australian goods, services or assets will result in increased demand for the AUD.

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Definitions:

Marasmus

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A complex molecule composed of amino acids that perform a vast array of functions, including catalyzing metabolic reactions, DNA replication, and transporting molecules.

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Units of energy that food provides, essential for human metabolism and physical activities.

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A cluster of conditions – increased blood pressure, high blood sugar, excess body fat around the waist, and abnormal cholesterol levels – that occur together, increasing the risk of heart disease, stroke, and diabetes.