Floating exchange rates A) systematically lead to much larger ...

[ss2343]

Floating exchange rates
 
  A) systematically lead to much larger but less frequent short-run deviations from the absolute PPP.
  B) systematically lead to much larger and more frequent short-run deviations from the relative PPP.
  C) systematically lead to much smaller and less frequent short-run deviations from the relative PPP.
  D) systematically lead to much smaller but more frequent short-run deviations from the relative PPP.
  E) systematically lead to much smaller and less frequent short-run deviations from the absolute PPP.

Question 2

Under a fixed exchange standard, if the domestic demand for foreign exchange increases
 
  A) the central monetary authority must meet the demand out of its reserves.
  B) the central monetary authority must increase the supply of domestic money.
  C) the fixed exchange standard will breakdown.
  D) inflation will increase.
  E) the domestic currency must be depreciated.

[harveenkau8139]

Answer to Question 1

B

Answer to Question 2

A

[ss2343]

Excellent

[kthug]

Gracias!