Under a System of Floating Exchange Rates, an Excess Demand

question 129

Multiple Choice

Under a system of floating exchange rates, an excess demand for a particular currency will lead to a(n)

• A) depreciation of that currency.
• B) long-term shortage of that currency.
• C) appreciation of that currency.
• D) long-term surplus of that currency.

---

Definitions:

Statistical Probability

A measure of the likelihood of a specific event or outcome occurring, based on quantitative data and mathematical calculations.

Predictive Accuracy

The ability of a model or method to correctly forecast the outcome of unknown data points or future events.

Coin Tosses

A simple random experiment involving the flipping of a coin to decide between two possibilities, often used to demonstrate basic probability or make unbiased decisions.

Group Identity

A person's sense of belonging to a particular group, including the adoption of the group's attitudes, values, and behaviors, which contributes to the social cohesion and individual identity.