In Chapter 21,the Expected Future Nominal Exchange Rate in the Long

question 4

Multiple Choice

In chapter 21,the expected future nominal exchange rate in the long run say,Eet+n,is assumed to be the nominal exchange rate at which

• A)the current account is in balance.
• B)the future rate of appreciation or depreciation is constant.
• C)domestic and foreign price levels are equal.
• D)one unit of foreign currency exchanges for one unit of domestic currency.
• E)none of the above

---

Definitions:

Factor 2

A component or element that contributes to a particular result or situation.

Profit

The financial gain obtained when the amount earned from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Marginal Product

Marginal product is the additional output resulting from the use of one more unit of a variable input, holding other inputs constant.

Fertilizer

Substances used to supply essential nutrients to plants, aiming to enhance growth, yields, and quality of agricultural produce.