Exchange Rates Appear to Be More Volatile Than the Monetary

question 45

Multiple Choice

Exchange rates appear to be more volatile than the monetary approach would predict,because:

• A) the monetary approach holds better in the short run than in the long run.
• B) prices of goods and services adjust instantaneously, while prices of assets are sluggish.
• C) prices of goods and services are sluggish to adjust, while prices of assets adjust instantaneously.
• D) the monetary approach is based on many unrealistic assumptions so that it fails to predict exchange rates in both short run and long run.

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Definitions:

Specific Performance

A legal remedy requiring a party to fulfill their obligations under a contract, rather than paying damages for nonperformance.

Monetary Damages

Money claimed by or ordered paid to a party to compensate for injury or loss caused by the wrong of the opposite party.

Lemon Laws

Statutes that provide remedies to consumers for products, typically vehicles, that repeatedly fail to meet standards of quality and performance.

Defective Parts

Components or elements of a product that are faulty, flawed, or do not meet specified standards of quality.