Real changes in currency values reflect changes in relative purchasing power.

Question

Quizplus · Accepted Answer

Real changes in currency values are determined by changes in relative purchasing power, which is influenced by economic factors such as inflation, interest rates, and trade balances. When the purchasing power of a currency increases relative to another currency, the exchange rate between the two currencies will change accordingly. Therefore, real changes in currency values do reflect changes in relative purchasing power.

Real Changes in Currency Values Reflect Changes in Relative Purchasing