When countries diverge, then their exchange rates tend to change. Which of the following divergences will not quickly lead to changes in exchange rates?

Question

Quizplus · Accepted Answer

Divergences in growth rates, interest rates, and inflation rates among countries can quickly lead to changes in exchange rates due to their direct impact on investment flows, purchasing power, and overall economic health. However, changes in the unemployment rate do not lead to quick adjustments in exchange rates because they are a lagging indicator of economic health and do not directly influence investor behavior or currency values in the short term.

When Countries Diverge, Then Their Exchange Rates Tend to Change