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fundamentals


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1 The determinants of asset prices or exchange rates which are not dependent on the initial expectations of market participants or on the methods of short-run forecasting they employ. Fundamentals are thus the forces of supply and demand which determine the levels to which asset or currency prices will converge after sufficient time for the effects of initial expectations to fade away, assuming that any fluctuations set up by speculative forces are stable.

2 The endowments, preferences, and technology that describe an economy.

Subjects: Economics.


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