3. The methods of market intervention depend on ________.

(a) The size of the countrys economy

(b) The magnitude of global trading in the subject currency

(c) The depth and breadth of development in the domestic financial markets

(d) All of the above

5. In the technical analysis of short-term exchange rate movements, the ___ the time horizon of the forecast, the ___ more the forecast is likely to be.

(a) longer; accurate

(b) shorter; inaccurate

(c) longer; inaccurate

(d) All of the above are incorrect

9. When the U.S. Federal Reserve announces an expansionary monetary policy which cuts U.S. dollar interest rates, the initial lower value of the dollar compared to the longer-term equilibrium value is often explained as ____

(a) undervalued

(b) capital flight

(c) speculation on the part of market participants

(d) an overshooting

_______ refers to a variety of short-term random events may cause currency values to deviate from their long-term fundamental path (exchange rate). ______ means that market participants who buy or sell in the foreign exchange markets would drive currency back to the long-term path.

(a) Stabilizing expectations; noise

(b) Noise; stabilizing expectations

(c) Stabilizing expectations; market sentiments

(d) Noise; arbitrage