(03.09 mc)\nwhich of these statements related to inflation and currency exchange is true?\n○ currency…

(03.09 mc)\nwhich of these statements related to inflation and currency exchange is true?\n○ currency exchange rates determine the rate of inflation.\n○ currency exchange rates change in proportion to the inflation rate.\n○ inflation and currency exchange rates have no relationship to each other.\n○ inflation can affect currency exchange rates and lead to changes in trade demand.

(03.09 mc)\nwhich of these statements related to inflation and currency exchange is true?\n○ currency exchange rates determine the rate of inflation.\n○ currency exchange rates change in proportion to the inflation rate.\n○ inflation and currency exchange rates have no relationship to each other.\n○ inflation can affect currency exchange rates and lead to changes in trade demand.

Answer

Answer:

Inflation can affect currency exchange rates and lead to changes in trade demand.

Brief Explanations:

Inflation impacts a country's purchasing - power parity. Higher inflation usually weakens a currency, which can change exchange rates and influence trade demand as goods become relatively more or less expensive for foreign buyers. Currency exchange rates don't solely determine inflation, and they don't change in strict proportion to inflation. Also, inflation and exchange rates are related.