asset market view of exchange rate determination does NOT state that the spot rate
A) should follow a random walk
B) is affected primarily by a nation's long?run economic prospects
C) is influenced by a nation's annual economic growth
D) should be strongly affected by a nation's balance of trade

Question

Quizplus · Accepted Answer

The asset market view of exchange rate determination does not state that the spot rate should be strongly affected by a nation's balance of trade. Instead, it emphasizes the role of short-term capital flows and changes in interest rates in determining exchange rates. The other options (A, B, and C) are commonly associated with the asset market view.

Asset Market View of Exchange Rate Determination Does NOT State