Question

Which one of the following statements is true regarding exchange rates in the flexible exchange rate system?

Select one:

A

Exchange rates are unpredictable because they are simultaneously influenced by long-run, medium run,

factors.

and short-run

B . Interest rate arbitragers broaden the short-term dis-equilibrium.

C. Starting at the short-term equilibrium, if the market expects that country A's currency would appreciate in the demand for country's A currency would decrease.

D.
Exchange rates should always be at the long-run equilibrium which satisfies the purchasing power parity.​

Answer 1

Answer:

a

Explanation: