According to the monetary approach,the exchange rate can be expressed as
A)S = $\frac { M _ { \$ } } { M _ { £ } }$ × $\frac { V _ { \$ } } { V _ { £ } }$ × $\frac { y _ { t } } { y _ { \$ } }$
B) $P _ { \$ }$ = $\frac { M _ { \$ } V _ { \$ } } { y _ { \$ } }$
C)S = $\frac { M _ { \$ } } { M _ { £ } }$ × $\frac { V _ { \$ } } { V _ { £ } }$ × $\frac { y _ { \$ } } { y _ { £ } }$
D)none of the options

Question

Quizplus · Accepted Answer

The monetary approach states that the exchange rate is determined by the relative money supplies and income levels of the two countries. The correct formula is S = (M$ / M£) × (V$ / V£) × (y£ / y$), where S is the exchange rate, M$ and M£ are the money supplies of the two countries, V$ and V£ are the income velocities of money, and y£ and y$ are the income levels of the two countries.

According to the Monetary Approach,the Exchange Rate Can Be Expressed M$M£\frac { M _ { \$ } } { M _ { £ } }M£​M$​​

According to the Monetary Approach,the Exchange Rate Can Be Expressed $\frac { M _ { \$ } } { M _ { £ } }$