Exchange rates are affected by changes in:

Question

Quizplus · Accepted Answer

Exchange rates are affected by both the demand for and supply of a currency. The demand for a currency is influenced by various factors such as economic growth, inflation rates, interest rates, and political stability. Similarly, the supply of a currency is affected by factors such as foreign investment, trade flows, and government policies. Therefore, changes in both the demand for and supply of a currency can impact exchange rates. The export of goods, which is mentioned in option D, is one of the factors that can affect the supply of a currency, but it is not the only one. Thus, option D is incorrect.

Exchange Rates Are Affected by Changes In