All of the following are important long-run determinants of exchange rates EXCEPT
A) consumer tastes.
B) trade policy.
C) labor productivity.
D) interest rates.

Question

Quizplus · Accepted Answer

Interest rates are more commonly associated with short-term fluctuations in exchange rates rather than their long-run determinants. Long-run exchange rates are more influenced by factors such as consumer tastes, trade policy, and labor productivity, which affect the fundamental supply and demand for a country's currency through trade and investment flows.

All of the Following Are Important Long-Run Determinants of Exchange