- CFA Exams
- CFA Level I Exam
- Topic 2. Economics
- Learning Module 8. Currency Exchange Rates: Understanding Equilibrium Value
- Subject 6. Monetary and Fiscal Policies
CFA Practice Question
Which is NOT an assumption of the monetary approach?
B. There is sufficient slack in the economy to allow changes in output.
C. The rate of inflation changes because of money supply changes.
A. The PPP holds.
B. There is sufficient slack in the economy to allow changes in output.
C. The rate of inflation changes because of money supply changes.
Correct Answer: B
It assumes the output is fixed and the price level can be changed.
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