Which of the following are likely to contribute to the volatility of exchange rates between the major currencies?
(a) A growth in the size of short- term capital flows relative to current account flows
(b) The abolition of exchange controls
(c) A harmonisation of international macroeconomic policies
(d) The adoption of money supply targets by individual countries
(e) The adoption of exchange rate targets by individual countries
(f) A growing belief that speculation against exchange rate movements is likely to be stabilising
(g) A growing belief that speculation against exchange rate movements is likely to be destabilising
(h) A growing ease of international transfers of funds
(i) Countries' trade cycles become more synchronised with each other
Correct Answer:
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(b) Yes
(c) No
(d) Yes: note tha...
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