The following example supports which extension to the Monetary Approach to Exchange rates: The chairman of a central bank announces a new monetary policy.Immediately,there is a change in the exchange rate.
A) News approach
B) Trade balance approach
C) Equilibrium approach
D) Overshooting approach

Question

Quizplus · Accepted Answer

The News approach to exchange rates suggests that expectations about future monetary policies can cause immediate changes in exchange rates. In this example, the announcement of a new monetary policy by the central bank chairman leads to an immediate change in the exchange rate, illustrating how news or expectations about future policies can impact exchange rates right away.

The Following Example Supports Which Extension to the Monetary Approach