The exchange rate that equates the quantities of the currency supplied and demanded in the foreign exchange market is called the ______ exchange rate.
A) real
B) market equilibrium value of the
C) target
D) fixed

Question

Quizplus · Accepted Answer

The market equilibrium value of the exchange rate is the rate at which the quantity of a currency supplied in the foreign exchange market equals the quantity of the currency demanded. This means that there is no excess supply or excess demand in the market, and the exchange rate is in equilibrium. Therefore, the best choice is B, the market equilibrium value of the exchange rate.

The Exchange Rate That Equates the Quantities of the Currency