If I want 500€ I need to pay 6000 SEK. What is it that decides which currency is the strongest? Like in Sweden the SEK is reaaally low right now. Why?
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Countries choose how much money create, and the value is relative to the size/strength of the economy. Think of each economy as a pizza and some countries with the same size pizzas choose to slice their pizza into 6 slices, while others cut it into 8, 10, or 20 slices… size of each slice can vary but that doesn’t tell us much about the size or health of the economy. It’s only whether those slices grow or shrink over time that determines strong or weak economy. Just because the exchange rate is 500:6000 now doesn’t tell us anything, what does is whether that exchange rate used to be 500:5000, 500:10,000 or whatever.
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