- CFA Exams
- CFA Exam: Level I 2021
- Study Session 5. Economics (2)
- Reading 18. Currency Exchange Rates
- Subject 6. Exchange Rates, International Trade, and Capital Flows
CFA Practice Question
Which approach centers on changes in the prices of goods and services as the determinant of a country's balance of payments and the exchange value of its currency?
B. The absorption approach
C. The multiplier approach
A. The elasticities approach
B. The absorption approach
C. The multiplier approach
Correct Answer: A
User Contributed Comments 3
| User | Comment |
|---|---|
| moneyguy | Key word here is "changes" = elasticity |
| schweitzdm | Changes in prices: - regard elasticities Changes in real domestic income: - regard absorption |
| farhan92 | RIP Tupac. |