Concerning exchange-rate determination, "market fundamentals" include all of the following EXCEPT
A) monetary policy and fiscal policy.
B) profitability and riskiness of investments.
C) speculative opinion about future exchange rates.
D) productivity changes affecting production costs.

Question

Quizplus · Accepted Answer

Market fundamentals include factors that affect the supply and demand for a currency, such as monetary and fiscal policies, productivity changes, and profitability and riskiness of investments. However, speculative opinion about future exchange rates is not a fundamental factor but rather reflects the expectations of market participants.

Concerning Exchange-Rate Determination, "Market Fundamentals" Include All of the Following