According to the ________,if the cost of holding one currency rises relative to the cost of holding another,then demand will shift to the lower relative cost currency.
A) Overshooting approach
B) Currency substitution approach
C) Portfolio-balance approach
D) Trade balance approach

Question

Quizplus · Accepted Answer

The Currency substitution approach suggests that if the cost of holding one currency increases compared to another, investors will shift their demand towards the currency with the lower relative cost. This approach emphasizes the choice between different currencies based on their holding costs.

According to the ________,If the Cost of Holding One Currency