Money, Inflation, and Exchange Rates
Money, inflation and exchange rates are all linked, but the connections are relatively complicated. Inflation occurs when a nation's central bank attempts to supply greater quantity of money than the public desires to hold. Rising prices help balance the amount of money demanded and supplied.
Suggested citation: “Money, Inflation, and Exchange Rates,” Federal Reserve Bank of Cleveland, Economic Trends, no. 97-07, pp. 18, 07.01.1997.