Reference no: EM132592692

Exchange rates and Balance of Payments

Which of the following are likely to contribute to the volatility of exchange rates between the major currencies? 

(a) A growth in the size of short-term capital flows relative to current account flows Yes / No

(b) The abolition of exchange controls Yes / No

(c) A harmonisation of international macroeconomic policies Yes / No

(d) The adoption of money supply targets by individual countries Yes / No

(e) The adoption of exchange rate targets by individual countries Yes / No

(f) The adoption of inflation targets by individual countries Yes / No

(g) A growing belief that speculation against exchange rate movements is likely to be stabilising Yes / No

(h) A growing belief that speculation against exchange rate movements is likely to be destabilising Yes / No

(i) A growing ease of international transfers of funds   Yes / No

(j) Countries' business cycles become more synchronised with each other Yes / No

As a business manager, how do you think exchange rate could influence your business?