Which of the following does not cause exchange rate fluctuations?
a. Changes in absolute international expectations but not relative international expectations.
b. Central bank interventions in the foreign exchange market.
c. Changes in relative international expectations.
d. Relative international price levels.
e. Changes in relative international incomes.
Question 2 - The major difference between absolute purchasing power parity (APPP) and relative purchasing power parity (RPPP) is:
a. APPP deals the equilibrium exchange rate for a basket of goods, and RPPP deals with changes in equilibrium exchange rate for a basket of goods.
b. APPP deals with changes in nominal exchange rates for a basket of goods, and RPPP deals with changes of exchange rates for a particular good.
c. APPP deals with the equilibrium exchange rate for one good, and RPPP deals with the equilibrium exchange rate for a basket of goods.
d. APPP deals with changes in nominal exchange rates for a basket of goods, and RPPP deals with levels of exchange rates for a particular good.
e. None of the above.
Question 3 - Which of the following does not cause exchange rate fluctuations?
a. Changes in relative international incomes.
b. Changes in relative international expectations.
c. Central bank interventions in the foreign exchange market.
d. Changes in relative international tax rates.
e. All of the above variables cause exchange rate fluctuations.
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