The study of exchange rate determination is a relatively new part of international economics, since
A) for much of the past century, exchange rates were fixed by government action.
B) the calculations required for this were not possible before modern computers became available.
C) economic theory developed by David Hume demonstrated that real exchange rates remain fixed over time.
D) dynamic overshooting asset pricing models are a recent theoretical development.
E) the exchange rate never fluctuates.

Question

Quizplus · Accepted Answer

For much of the past century, exchange rates were fixed by government action, which meant there was no need for the study of exchange rate determination. It was only after the collapse of the Bretton Woods system in 1971 that exchange rates became more flexible and the study of exchange rate determination became necessary.

The Study of Exchange Rate Determination Is a Relatively New