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Questions and Answers

Which theory explains the relationship between exchange rates and international goods-market integration?

  • Fisher effect
  • Purchasing power parity (correct)
  • Long-run model of exchange rates
  • Law of one price

What is the concept that describes the effect of ongoing price level inflation on exchange rates in the long run?

  • Fisher effect
  • Long-run model of exchange rates (correct)
  • Purchasing power parity
  • Law of one price

What is the term used to describe the exchange rate adjusted for the differences in price levels between countries?

  • Fisher effect (correct)
  • Law of one price
  • Purchasing power parity
  • Long-run model of exchange rates

What factors affect real exchange rates and relative currency prices in the long run?

<p>Long-run model of exchange rates (D)</p> Signup and view all the answers

What is the relationship between international real interest rate differences and expected changes in real exchange rates?

<p>Fisher effect (C)</p> Signup and view all the answers

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