Speculators play an important role in a system of floating exchange rates because
a. to make a profit, they must buy a currency when its value is low and sell it when its value is high.
b. their purchases and sales lead to wild gyrations in exchange rates and thus increase instability.
c. they place additional risks on businesses that need to purchase and sell foreign currency.
d. All of the above are correct.
a
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Strictly speaking, which has a cost?
A) A decision B) A cup C) A cup of diamonds D) A gallon of water E) Checking accounts that charge fees for deposits below $100
Suppose there is a real appreciation. This real appreciation is more likely to cause a reduction in net exports when
A) domestic output is relatively low. B) foreign output is relatively high. C) the Marshall-Lerner condition does not hold. D) imports are not at all sensitive to price changes. E) exports and imports are relatively sensitive to price changes.