In the Long Run, the Nominal Exchange Rate Is Determined

question 78

Multiple Choice

In the long run, the nominal exchange rate is determined by:

• A) the law of one price.
• B) supply and demand in currency markets.
• C) the relative prices in the two economies.
• D) adjustments in factor prices.
• E) monetary policy.

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Definitions:

Complicate

To make something more difficult or complex, often by adding new elements or problems.

Mopane Worm

A caterpillar in Southern Africa that is harvested for food, known scientifically as Gonimbrasia belina.

Generalization

The process in a learning context where a response is elicited by stimuli similar to the original stimulus.

Facilitate

To make an action or process easier by providing assistance or reducing obstacles.