Changes in which of the following will cause a change in exchange rates?

Question

Quizplus · Accepted Answer

All of the factors listed in the options - real interest rates, consumer preferences, and perceptions of economic and political stability - can affect the supply and demand for currencies in the foreign exchange market, thus affecting exchange rates. For example, if the real interest rates in a country increase, demand for that country's currency may also increase as investors seek higher returns, leading to an appreciation in the currency's value. Likewise, if there are concerns about the economic or political stability of a country, investors may sell off that country's currency, leading to a depreciation in its value. Consumer preferences, such as a stronger preference for imports from one country over another, can also affect the flow of currencies and influence exchange rates.

Changes in Which of the Following Will Cause a Change