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In a Floating Exchange Rate Regime,the Exchange Rate Is the Equilibrium

Question 36

Multiple Choice

In a floating exchange rate regime,the exchange rate is the equilibrium price of the currency.Changes in supply for a currency will cause changes in the equilibrium exchange rate.Which of these statements in relation to the AUD supply curve in the FX market is incorrect?


A) For AUD holders, a rise in the price of foreign exchange means foreign currency priced goods, services and assets become cheaper.
B) The AUD supply curve is upward-sloping, reflecting the demand for foreign currency by AUD holders.
C) Supply of AUD onto the FX market rises as holders of AUD buy foreign currency.
D) As the price of the AUD increases, the price of the foreign currency falls.

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