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Question
Which of the following is true of the determination of exchange rates?
A. Differences in relative demand and supply do not explain the determination of exchange rates.
B. Differences in relative demand and supply explain the factors underlying the phenomenon behind the demand for and supply of a currency.
C. The differences in relative demand and supply alone provide a high level understanding of behind determination of exchange rates.
D. While the differences in relative demand and supply they provide an accurate explanation for appreciation of currencies, they fail to explain depreciation.
E. The differences in relative demand and supply cannot explain or predict the conditions under which a particular currency will be in demand or not.
Answer
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