Question

exchange rates can indicate economic health by showing exactly how much of each nation’s currency is liquid. revealing how much of each nation’s income goes to savings. showing the relative strength of different nations’ currencies. examining spending patterns across nations and continents.

Answer 1

Among the options you provided, the correct answer is "showing the relative strength of different nations' currencies." Exchange rates reflect the value of one currency in relation to another, indicating how much one currency can be exchanged for another. By comparing exchange rates, we can assess the relative strength or weakness of different nations' currencies. A strong currency implies economic stability and confidence, while a weak currency can indicate economic challenges.

While exchange rates can indirectly provide some insights into economic health, such as export competitiveness or inflationary pressures, they do not directly reveal information about the liquid currency, savings rates, or spending patterns across nations. These factors are influenced by a wide range of economic indicators and policies beyond just exchange rates.