Short-run changes in the exchange rate are less volatile than inflation differentials between countries.

Name: Short-run changes in the exchange rate are less volatile than inflation differentials between countries.
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Question

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Short-run changes in the exchange rate can be highly volatile due to market speculation, interest rate differentials, political instability, and economic data releases, whereas inflation differentials between countries tend to change more gradually.

Short-Run Changes in the Exchange Rate Are Less Volatile Than