Which of the following might affect flexible exchange rates between two countries?

Question

Quizplus · Accepted Answer

All of the options given (inflation, interest rates, and GDP growth) can affect flexible exchange rates between two countries because they indicate changes in the economic conditions of those countries, potentially affecting the demand for and supply of each country's currency. Inflation, interest rates, and GDP growth all can determine the attractiveness of a country's currency to foreign investors, businesses, and travelers, relative to other currencies. As a result, changes in any of these economic indicators can contribute to changes in the exchange rate between two countries.

Which of the Following Might Affect Flexible Exchange Rates Between