Choose the best answer:

1.Commodity arbitrage is the market process which aligns, or equates, the exchange-ratio between two different kinds of money in the marketplace to the configuration, or structure, of commodity prices.This corrective mechanism is described by the:

a.) Rogoff-Davidson Theory of Foreign Exchange.

b.) Balance-of-Payments (BOP) Theory of Foreign Exchange.

c.) Purchasing Power Parity (PPP) Theory of Foreign Exchange.

d.) International Economics and Finance Theory of Foreign Exchange.

2.A rise in foreign exchange rates merely anticipates the movement of domestic commodity prices.This statement is associated with the:

a.)Interest Parity Theory.

b.)Balance-of-Payments (BOP) Theory of Foreign Exchange.

c.)Purchasing Power Parity (PPP) Theory of Foreign Exchange.

d.)Monetary Approach to BOP Theory.