CFA Practice Question

There are 253 practice questions for this study session.

CFA Practice Question

Which model claims that monetary policy affects the exchange rate primarily through the interest rate sensitivity of capital flows?

A. The Mundell-Fleming Model.
B. The Taylor rule.
C. The portfolio balance approach.
Correct Answer: A

It states that when monetary policy is tightened, the currency will appreciate, and when the monetary policy is eased, the currency will depreciate.

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