- CFA Exams
- CFA Level I Exam
- Study Session 4. Economics
- Reading 10. Currency Exchange Rates: Understanding Equilibrium Value
- Subject 6. Monetary and Fiscal Policies
CFA Practice Question
Which model assumes output is fixed but price level is changed by exchange rates?
A. The Mundell-Fleming Model.
B. The monetary approach.
C. The Taylor Rule.
Explanation: It assumes that monetary policy affects exchange rates first and then the price level.
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