1. In the short-run, exchange rates are in part determined by:

Agents taking advantage of changes in interest rates

Agents engaging in risk-less arbitrage

Agents acting irrationally

Agents sheltering their money from taxation

2. In the long-run, a shock to supply chains will lead to no long run changes in the price level or output.

True

False

3. Under absolute PPP, the relationship between currencies simply collapses into the relationship between their monetary policy choices.

True

False