Although several economic and political factors can influence foreign exchange rate movements, by far the most important explanation for long-term changes in exchange rates is fiscal policy that a country adopts.

Question

Quizplus · Accepted Answer

While fiscal policy can have an impact on foreign exchange rates in the short term, a wide range of economic, political, and social factors can also influence exchange rates. Long-term changes in exchange rates are the result of complex and multifaceted factors such as changes in economic growth rates, inflation, trade patterns, and geopolitical developments.

Although Several Economic and Political Factors Can Influence Foreign Exchange