When the Exchange Rate Is Allowed to Adjust to Market

question 109

Multiple Choice

When the exchange rate is allowed to adjust to market forces, all of the following are true except one.Which is the exception?

• A)The foreign exchange market clears continually.
• B)The quantities of foreign exchange demanded and supplied are equal.
• C)The exchange rate will only change if the central bank alters the exchange rate.
• D)The exchange rate will remain constant until a change occurs in one of the factors that affect supply or demand.
• E)The forces of demand and supply determine the exchange rate.

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Definitions:

Employees Organizes

The process by which workers come together to form a union or similar collective bargaining group.

Functional Lines

Divisions within an organization based on different functions or departments such as marketing, finance, and operations.

Functional Expertise

Specialist knowledge and skills in a particular field or area of business.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale as fixed costs are spread out over more units of output.