Economics Exchange Rates Questions
Exchange rates play a crucial role in international economic integration by facilitating trade and investment between countries. They determine the value of one currency in relation to another, which affects the cost of imports and exports. A favorable exchange rate can make a country's exports cheaper and more competitive in foreign markets, leading to increased trade and economic growth. Additionally, exchange rates influence the flow of capital across borders, as investors seek higher returns in countries with stronger currencies. Overall, exchange rates promote economic integration by enabling the smooth exchange of goods, services, and investments between nations.