Asked by Shelby Wilcox on May 18, 2024
Verified
Which of the following is not a cause of movement in the exchange rate between two currencies?
A) Shifting consumer preferences for the other country's goods
B) Government policies concerning imports, exports and foreign investment
C) The willingness or reluctance of local banks to deal in foreign currencies
D) Economic conditions in the two countries
Economic Conditions
The state of an economy at a given time, encompassing factors like inflation, unemployment, and GDP growth.
Government Policies
Rules, regulations, and actions taken by a government to govern its citizens and manage its economic, social, and administrative affairs.
- Elucidate the principles behind currency valuation including its influencing factors like market demand and supply, alongside significant economic indicators.
Verified Answer
SA
Sharon abramsMay 19, 2024
Final Answer :
C
Explanation :
The willingness or reluctance of local banks to deal in foreign currencies may affect the availability and cost of foreign currency transactions, but it is not a direct cause of movement in the exchange rate between two currencies. The other options listed are all factors that can cause movement in the exchange rate.
Learning Objectives
- Elucidate the principles behind currency valuation including its influencing factors like market demand and supply, alongside significant economic indicators.