What factors are most important for determining exchange rate fluctuations in the long run?
A) preferences for domestic and foreign goods across countries
B) relative rates of productivity growth across countries
C) relative price levels across countries
D) All of the above are correct.
D
You might also like to view...
Which of the following represents an example of a major cartel in global markets? a. The Organization of Wheat and Corn Exporting Countries (OWCEC)
b. The Organization of Petroleum Exporting Countries (OPEC). c. The Brotherhood of Scrap Iron Exporting Countries (BSIEC). d. The Amalgamated Association of Alfalfa Producing Countries (AAAPC).
Assume that the FE curve is flatter than the LM curve. A negative internal shock shifts the IS curve leftward. Under zero sterilization, which one of the following will happen next?
A. Because of the incipient balance of payments surplus, the IS curve will shift rightward. B. Because of the incipient balance of payments deficit, the LM curve will shift leftward. C. Because of the incipient balance of payments deficit, the IS curve will shift leftward. D. Because of the incipient balance of payments surplus, the LM curve will shift rightward.