Question 1 Answer the following questions a and b Define long exposure and explain the relation between the variability of the domestic currency value and the variability of the exchange rate (5 Marks) Define short exposure and explain the relation between the variability of the domestic currency value and the variability of the exchange rate (5 Marks) Type your answer here Question 2 Explain the monetary model of exchange rate (i) What is the relationship between the demand of money and the price of asset, and the levels of real income (5 marks) (ii) What is the relationship between the supply of money and the price of asset, and the levels of real income (5 marks) Type your answer here

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Question: Question 1: Answer the following questions a and b: Define long exposure and explain the relation between the variability of the domestic currency value and

Question 1:

Answer the following questions a and b:

Define long exposure and explain the relation between the variability of the domestic currency value and the variability of the exchange rate? (5 Marks)
Define short exposure and explain the relation between the variability of the domestic currency value and the variability of the exchange rate? (5 Marks)

Type your answer here:

Question 2:

Explain the monetary model of exchange rate. (i) What is the relationship between the demand of money and the price of asset, and the levels of real income? (5 marks) (ii) What is the relationship between the supply of money and the price of asset, and the levels of real income? (5 marks)

Type your answer here:

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