An important thing to remember about foreign exchange rate determination is that parity conditions, asset approach, and balance of payments approaches are ________ theories rather than ________ theories.
A) competing; complementary
B) competing; contemporary
C) complementary; contiguous
D) complementary; competing

Question

Quizplus · Accepted Answer

Parity conditions, asset approach, and balance of payments approaches are complementary theories. They provide different insights into how exchange rates are determined, and can be used together to gain a more comprehensive understanding of exchange rate fluctuations.

An Important Thing to Remember About Foreign Exchange Rate Determination