Which of the following statements is the MOST accurate?
In general
A) the monetary approach to the exchange rate is a long run theory.
B) the monetary approach to the exchange rate is a short run theory.
C) the monetary approach to the exchange rate is both a short and long run theory.
D) the monetary approach to the exchange rate neither long run nor short run theory.
E) the monetary approach to the exchange rate is considered less practical than the law of one price.

Question

Quizplus · Accepted Answer

The monetary approach to the exchange rate is primarily considered a long-run theory because it focuses on how factors like money supply, price levels, and interest rates affect exchange rates over the long term, rather than short-term fluctuations.

Which of the Following Statements Is the MOST Accurate