Given the daily volume of foreign-exchange transactions,it is most accurate to say which of the following?
A) It is impossible for a government's interventions in the foreign-exchange market to affect market psychology.
B) A government's intervention in the foreign-exchange market can reverse a currency's slide for the long term.
C) A government's intervention cannot force the foreign-exchange market to move in a direction it doesn't want to go.
D) A government should focus more on intervening in foreign-exchange markets than on correcting economic fundamentals.

Question

Quizplus · Accepted Answer

The daily volume of foreign-exchange transactions is incredibly large, which means that a government's intervention cannot force the foreign-exchange market to move in a direction it doesn't want to go. The market is too big and too complex for any government to control completely. However, a government's intervention can have a short-term effect on the currency's value if it aligns with the market's direction.

Given the Daily Volume of Foreign-Exchange Transactions,it Is Most Accurate