ECONOMICS
TRADE EXCHANGE AND INTERDEPENDENCE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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People like to only trade with countries that use the dollar
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Currency has a different value in each country
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Countries only trade with countries with the same currency
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Paper money has the most value
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Detailed explanation-1: -Aside from factors such as interest rates and inflation, the currency exchange rate is one of the most important determinants of a country’s relative level of economic health. A higher-valued currency makes a country’s imports less expensive and its exports more expensive in foreign markets.
Detailed explanation-2: -Why are Currencies Different Around the World? Different currencies exist because different countries have various economic landscapes. In most cases, a county which exports a lot of goods will aim to have a low-value currency to keep on top of their trade advantage and attract people to buy their products.
Detailed explanation-3: -The purpose of a fixed exchange rate system is to keep a currency’s value within a narrow band. Fixed exchange rates provide greater certainty for exporters and importers and help the government maintain low inflation.