Which of the following best describes why exchange rates are nearly identical in different markets around the world?

Question

Quizplus · Accepted Answer

Arbitrageurs take advantage of even small differences in exchange rates between different markets by buying currency in the low-priced market and selling it in the high-priced market, thereby driving the exchange rates towards equilibrium. As a result, exchange rates tend to be nearly identical in different markets around the world. Central bank actions and policymaker agreements can influence exchange rates, but they do not fully explain why exchange rates are nearly identical in different markets. Currency converters are simply agents who facilitate the exchange of currency between individuals or businesses, and they do not play a significant role in determining exchange rates.

Which of the Following Best Describes Why Exchange Rates Are