In the long run, exchange rates are determined by

Question

Quizplus · Accepted Answer

Exchange rates are mainly determined by economic fundamentals such as price levels, productivity levels, and competitiveness in different countries. Governments and central banks may influence exchange rates through monetary and fiscal policies, but in the long run, economic fundamentals have a greater impact on exchange rates. The gold standard is no longer in use, and interest rate differentials only have a short-term effect on exchange rates.

In the Long Run, Exchange Rates Are Determined by