What factors are most important for determining exchange rate fluctuations in the long run?

Question

Quizplus · Accepted Answer

All of the factors listed (relative price levels, productivity growth, and preferences for domestic and foreign goods) can have significant impacts on exchange rates over time. Factors such as changes in inflation, interest rates, and political stability may also play important roles in determining long-run fluctuations in currency values.

What Factors Are Most Important for Determining Exchange Rate Fluctuations