Question

The exchange rate between the U.S. dollar and other currencies is dependent in the short run...

The exchange rate between the U.S. dollar and other currencies is dependent in the short run on all of the following EXCEPT

A.

the desirability of U.S. financial securities.

B.

the law of one price.

C.

the foreign demand for​ U.S.-produced goods.

D.

the level of interest rates in the United States relative to foreign interest rates.

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Answer #1

Correct Answer:

B. The law of one price

Explanation:

The law of one price is a phenomenon or theory regarding the one price concept of a good when exchange rates are taken into the consideration. But, this theory is not a factor that affects the exchange rate.

The alternatives A, C and D are the factors or determinants that affect the value of the US dollar and the exchange rate of US dollar against all the major currencies is affected due to these factors.

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