Which of the Following Is NOT a Factor That Causes

question 42

Multiple Choice

Which of the following is NOT a factor that causes substantial exchange rate volatility?

• A) Unexpected news
• B) Changes in expectations about future trade flows
• C) Instantaneous adjustments by goods and services prices to shocks.
• D) Instantaneous reactions by financial assets markets to shocks

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Definitions:

Cournot Duopoly

A market situation where two firms compete with one another by deciding on output quantity with the assumption that the other's decision remains constant.

Rivals

Competitors within the same market that vie for customers and market share by offering similar goods or services.

Reaction Curve

Relationship between a firm’s profit-maximizing output and the amount it thinks its competitor will produce.

Nash Equilibrium

A concept in game theory where no participant can gain by unilaterally changing their strategy if the strategies of the others remain unchanged.