Question

What determines foreign exchange rates?

a. a combination of rising productivity elsewhere and US inflationary policies.
b. every central bank needed to maintain gold reserves.
c. it increased the exchange rate of the US dollar.
d. the exchange rate of the American dollar was allowed to change unilaterally."

Answer 1

Option A Combination of rising productivity elsewhere and US inflationary policies

Step-by-step explanation:

The reason is that the it talks about the inflation control policies which is one of the key factor that affects inflation. Furthermore it also talks about the increase in productivity which means that the product demand is rising and so the demand of the currency would rise when the greater number of goods would be exported to different countries.