Exchange rate overshooting often occurs because ?

Related Mcqs:

A primary reason that explains the appreciation in the value of U.S dollar would be ?

A. large trade surpluses for the United States B. high inflation rates in the United States C. lack of investor confidence in U.S money policy D. high interest rates in the United States...

When the price of foreign currency (i.e the exchange rate) is below the equilibrium level ?

A. an excess demand for that currency exists in the foreign exchange market B. an excess supply of the currency exists in the foreign exchange market C. the demand for foreign exchange shifts outward to the right D. the demand for foreign exchange shifts backward to the left...

The assets market approach is most helpful in explaining ?

A. why exchange rates remain quite stable B. why governments change their money supplies C. long term exchange rate movements D. short term exchange rate movements...

Starting from a position where the nation’s money demand equals the money supply and its balance of payments is in equilibrium its balance of payments would move into a surplus position if there occurred in the nation a (an) ?

A. decrease in the money supply B. increase in the money supply C. decrease in the money demand D. None of the above...

Assume identical interest rates on comparable securities in the United States and foreign countries. Suppose investors anticipate that in the future the U.S dollar will depreciate against foreign currencies. investment funds would tend to ?

A. flow from the United States to foreign countries B. flow from foreign countries to the United States C. remain totally in foreign countries D. remain totally in the United States...