Actual Exchange Rates Can Be Very Different from the Expected

question 96

Multiple Choice

Actual exchange rates can be very different from the expected rates forecasted by economists. Many interrelated factors influence the value of a floating currency.
The three most important fundamental factors are the nation's balance of payments
Situation, world political events, and:

• A) the world inflation rate.
• B) the country's currency value.
• C) the nation's inflation rate relative to its trading partners.
• D) the tax structure of the nation.
• E) the supply of gold that the nation holds.

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