In the short run the level of floating exchange rates is determined mainly by ?
Correct answer: D. speculation
- A. interest rates
- B. competitiveness
- C. trade
- D. speculation
Explanation
In the short run, floating exchange rates respond chiefly to speculation about future currency values, interest rates and economic conditions. Trade flows adjust more slowly, so they have less immediate influence.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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