Which of the Following Issues Are Difficulties for the Fundamental

question 43

Multiple Choice

Which of the following issues are difficulties for the fundamental approach to exchange rate forecasting?

• A)One has to forecast a set of independent variables to forecast the exchange rates. Forecasting the former will certainly be subject to errors and may not be necessarily easier than forecasting the latter.
• B)The parameter values, that is the α's and β's, that are estimated using historical data may change over time because of changes in government policies and/or the underlying structure of the economy. Either difficulty can diminish the accuracy of forecasts even if the model is correct.
• C)The model itself can be wrong.
• D)All of the above

---

Definitions:

Status Attainment

The process by which individuals occupy positions within the societal hierarchy, influenced by factors such as education, family background, and job achievement.

Property Owners

Individuals or entities that legally possess ownership rights over various forms of property, such as land, buildings, or intellectual property.

Economic Interests

The financial goals or motivations of an individual, organization, or country.

Employees

Individuals who are hired to perform services or tasks for compensation under the direction and control of an employer.