Question

What role does market speculation play in the determination of exchange rates?

a.

Positive speculation increases demand for the currency

b.

Positive speculation decreases demand for the currency

c.

Negative speculation increases demand for the currency

d.

Negative speculation decreases demand for the currency

Answer: (a).Positive speculation increases demand for the currency Explanation:Positive speculation regarding the future exchange rate increases demand for the currency.

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Q. What role does market speculation play in the determination of exchange rates?

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