ECONOMICS
FOREIGN CURRENCY MARKETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Prices of exports
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Costs of imports
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Competiveness
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None of the answers
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Detailed explanation-1: -This paper focuses on an accounting framework that is useful for distinguishing between the effects on exchange rates of four separate factors: relative price levels, balances of payments, interest rates and risk.
Detailed explanation-2: -When exchange rates change, the prices of imported goods will change in value, including domestic products that rely on imported parts and raw materials. Exchange rates also impact investment performance, interest rates, and inflation-and can even extend to influence the job market and real estate sector.
Detailed explanation-3: -Interest rates, money supply, and financial stability all affect currency exchange rates. Because of these factors, the demand for a country’s currency depends on what is happening in that country.
Detailed explanation-4: -Interest rates and inflation. Inflation and interest rates are closely related, and both affect exchange rates. Trade. A country’s trading relationship with the rest of the world can also affect its currency. Market expectations.