According to historical data, what is the effect of a sharp change in the current account on the exchange rate (both in the short and long run)?
A) At first, home currency will depreciate as CA balance falls, but over time, currency will begin to depreciate.
B) At first, home currency will appreciate as CA balance falls, but over time, currency will begin to depreciate.
C) At first, home currency will appreciate as CA balance rises, but over time, currency will begin to depreciate.
D) At first, home currency will depreciate as CA balance falls, but over time, currency will begin to appreciate.
E) At first, home currency will appreciate as CA balance falls, but over time, currency will begin to appreciate.
B
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According to aggregate demand and supply analysis, the negative supply shocks of 1973-1975 and 1978-1980 had the effect of
A) increasing aggregate output, lowering unemployment, and raising the inflation. B) decreasing aggregate output, raising unemployment, and raising the inflation. C) increasing aggregate output, raising unemployment, and raising the inflation. D) decreasing aggregate output, raising unemployment, and lowering the inflation.
How is the foreign exchange market similar to the stock market?
What will be an ideal response?