The correct option is D. Inflation can affect currency exchange rates and lead to changes in trade demand these statements related to inflation and currency exchange is true.
The rate at which the cost of goods and services is increasing in an economy is known as inflation. When costs of manufacturing, such as labor and raw materials, rise, inflation may result. As people are prepared to pay more for the product, inflation can result from an increase in demand for goods and services.
Since inflation can be thought of as a decline in a currency's purchasing power, it is common knowledge that inflation tends to devalue currencies. As a result, nations with high inflation typically see a weakening of their national currencies in relation to other currencies.
The right answer is D. These claims about inflation and currency exchange are accurate; they can influence exchange rates and impact trade demand.
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