In the short run, with floating exchange rates, the exchange rate is determined by

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Quizplus · Accepted Answer

In the short run, the exchange rate is determined by both the supply and demand for the currency. The demand for a currency is influenced by factors such as interest rates, inflation rates, economic growth, and political stability. The supply of the currency is influenced by factors such as the central bank's monetary policy, trade flows, and foreign investment in the country. The interaction of these factors will determine the exchange rate in the short run.

In the Short Run, with Floating Exchange Rates, the Exchange