Asked by connor Xiong on Apr 30, 2024
Verified
Which of the following is NOT a major factor influencing exchange rates between two countries?
A) The relative economic growth rates of the two countries
B) The relative interest rates in both countries
C) The relative budget deficits as a percent of GDP in both countries
D) The relative price levels of the two countries
Exchange Rates
The value of one currency for the purpose of conversion to another, influencing international trade and investment.
Economic Growth Rates
Represents the percentage increase in the value of all goods and services produced in an economy over a specific period, indicating the economy's health and expansion.
Interest Rates
The amount charged, expressed as a percentage of the principal, by a lender to a borrower for the use of assets.
- Comprehend the elements that determine the U.S. dollar's value and their impact on economic conditions.
Verified Answer
TB
talal bagherMay 02, 2024
Final Answer :
C
Explanation :
While budget deficits can have an impact on a country's currency in the long term, it is not considered a major factor in the short term fluctuation of exchange rates. The other options listed are all major factors that can influence exchange rates.
Learning Objectives
- Comprehend the elements that determine the U.S. dollar's value and their impact on economic conditions.