Question 5 2 pts Foreign exchange rates tend to be quite volatile because supply

Question

Question 5 2 pts Foreign exchange rates tend to be quite volatile because supply and demand for foreign exchange are indepent. O supply and demand for foreign exchange are not indepent and move in opposite directions. O supply and demand for foreign exchange are not indepent and move in the same direction O the foreign exchange market is dominated by speculators. Question 6 2 pts A situation in which foreign exchange rates adjust so that it takes the same amount of money' to buy the same basket of goods and services, regardless of the currency used for the purchase, is called the neutral currencies theorem O put-call parity. O interest rate parity. O purchasing power parity.

Explanation / Answer

A.) foreign exchange rates tend to be quite volatile because foreignexchange market is dominated by speculators

B). Purchasing Power Parity

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