All of the following are market determinants of exchange rates EXCEPT
A) changes in productivity in one country relative to another.
B) changes in real interest rates in one country relative to another.
C) changes in product preferences between countries.
D) changes in the relative prices of goods and services within a country.

Question

Quizplus · Accepted Answer

Changes in the relative prices of goods and services within a country are not a market determinant of exchange rates. The other options, changes in productivity, real interest rates, and product preferences, all affect the supply and demand for a currency in the foreign exchange market, thus affecting the exchange rate.

All of the Following Are Market Determinants of Exchange Rates