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The four determinants of exchange rates in the long run are A. relative price​ levels, relative...

The four determinants of exchange rates in the long run are

A. relative price​ levels, relative productivity​ growth, relative size of​ economies, and trade barriers.

B. relative price​ levels, relative productivity​ growth, relative supplies of gold​ reserves, and trade barriers.

C. relative price​ levels, relative productivity​ growth, tastes, and relative supplies of gold reserves.

D. relative price​ levels, relative productivity​ growth, tastes, and trade barriers.

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Answer #1

option D

D. relative price levels, relative productivity growth, tastes, and trade barriers.

An exchange is determined by the difference between price between countries and the purchasing power, the productivity growth is higher then the prices decreases and the exchange rate will strong, but if the growth is lower, then it will be weak.

The tastes or preferences, if foreign goods are prestigious then the demand for import is higher and the exchange rate decrease.

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