The asset market approach views exchange rates as being determined mainly by ?
Correct answer: D. efforts of investors to balance their portfolios among financial assets denominated in different currencies
- A. the use of import tariffs and quotas by governments
- B. the current account balance of each country
- C. the relative growth rate of national output between countries
- D. efforts of investors to balance their portfolios among financial assets denominated in different currencies
Explanation
The asset market approach treats currencies as assets and emphasizes investors' attempts to balance portfolios across assets denominated in different currencies. Their relative demand for these assets determines exchange rates.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? [email protected]
About Macroeconomics
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.
Practise Macroeconomics
1,499 free Macroeconomics MCQs from Economics, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Discussion
Stuck on an option, or know a faster way to get there? Ask or explain it here.
No comments yet. Be the first to explain this one.
Exams that ask Economics questions like this
Economics is on 3 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Macroeconomics questions
The purchasing power parity theory has limitations in forecasting exchange rate fluctuations for all of the following reasons except ?
According to the asset market approach increased investor confidence in the Mexican economy would cause the peso to ?
If the exchange rate between Swiss francs and British pounds is 5 francs per pound, then the number of pounds that can be obtained for 200 francs equals ?
The assets market approach is most helpful in explaining ?
Consulting firms that use large-scale econometric models to forecast exchange rate movements are engaging in ?
Suppose that the purchasing power parity estimate of the dollar/euro exchange rate is $1.30 per euro, and the current spot rate is $1.3 8 per euro. Comparing these two exchange rates from a long-run viewpoint you would ?