"The portfolio-balance approach of exchange rate determination assumes that households can choose to hold their wealth in money,domestic bonds,and foreign bonds."

Question

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The portfolio-balance approach of exchange rate determination assumes that households have the option to hold their wealth in different assets, including money, domestic bonds, and foreign bonds. This approach considers the demand and supply of these assets and their impacts on the exchange rate.

"The Portfolio-Balance Approach of Exchange Rate Determination Assumes That Households