In chapter 20,the expected future nominal exchange rate in the long run say,Eᵉt₊n,is assumed to be the nominal exchange rate at which
A)the current account is in balance.
B)the future rate of appreciation or depreciation is constant.
C)domestic and foreign price levels are equal.
D)one unit of foreign currency exchanges for one unit of domestic currency.
E) none of the above

Question

Quizplus · Accepted Answer

In the long run, the expected future nominal exchange rate is assumed to be the rate at which the current account is in balance, reflecting equilibrium in international trade and financial flows.

In Chapter 20,the Expected Future Nominal Exchange Rate in the Long