The exchange rate for a currency depends on many factors including:

Question

Quizplus · Accepted Answer

The demand for and supply of a currency in the market is a significant factor that impacts the exchange rate, as it determines the availability and attractiveness of the currency to investors and traders. Factors such as economic performance, political stability, and interest rates can influence the demand and supply of a currency, leading to fluctuations in its exchange rate. The other choices, such as the price of McDonald's hamburgers or options on futures of the foreign currency, are not directly related to the exchange rate and do not have a significant impact on it. The rate at which the Australian currency is pegged at is also not relevant for other currencies.

The Exchange Rate for a Currency Depends on Many Factors