One of the Most Fundamental Determinants of the Exchange Rate

question 98

Multiple Choice

One of the most fundamental determinants of the exchange rate is ______________ whereby the exchange rate between the currencies of two countries is in equilibrium
When it equates the prices of a basket of goods and services in both countries.

• A) free float
• B) free float (dirty)
• C) managed float
• D) purchasing power parity (PPP)
• E) absolute cost advantage

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Definitions:

Profit Margin

The amount by which revenue from sales exceeds costs in a business, expressed as a percentage.

Sales-Oriented

A business approach focused primarily on generating sales regardless of customer needs or the longer-term company interests.

Objective

A specific, measurable, attainable, relevant, and time-bound goal that an individual or organization aims to achieve.

Price Increases

Price increases refer to the action of raising the cost at which goods or services are sold, often in response to factors like inflation, increased production costs, or higher demand.