Since governments control the quantity of the currency of their country, they have more control over exchange rates than other prices.

Question

Quizplus · Accepted Answer

Exchange rates are affected by various factors such as inflation, interest rates, political stability, and trade balances. However, since governments control their country's monetary policy, they have more control over the quantity of their currency in circulation and can influence exchange rates through their actions such as setting interest rates and managing foreign exchange reserves.

Since Governments Control the Quantity of the Currency of Their