When the exchange rate is allowed to adjust to market forces, all of the following are true except one. Which is the exception?
a. The foreign exchange market clears continually.
b. The quantities of foreign exchange demanded and supplied are equal.
c. The exchange rate will only change if the central bank alters the exchange rate.
d. The exchange rate will remain constant until a change occurs in one of the factors that affect supply or demand.
e. The forces of demand and supply determine the exchange rate.
C
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If the capital-labor ratio equals 1.5 in the steady state, depreciation equals 20, and dilution equals 10, investment per worker equals
A) 15. B) 20. C) 30. D) 45.
The above figure shows the market demand curve for telecommunication while driving one's car (time spent on the car phone). The current price is $0.35 per minute. If the price were to increase by ten cents per minute, consumer surplus would
A) fall to $820. B) fall by $84. C) fall by $58. D) fall to $369.