The exchange rate is kept the same across geographically separate markets by ?
Correct answer: D. arbitrage
- A. hedging
- B. speculation
- C. government regulation
- D. arbitrage
Explanation
Arbitrageurs buy a currency where it is relatively cheap and sell it where it is dear, earning profit until the price difference disappears. This process equalizes exchange rates across geographically separate markets.
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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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