The article investigates how a country's exchange rate reacts to changes in money supply, prices, and wages. The study shows that when there is more money in circulation, the country's currency loses value, leading to lower interest rates and higher output. Additionally, improvements in labor productivity and global interest rates can also cause the currency to depreciate. The model used in the study aligns with real-world exchange rate fluctuations seen in major economies since the end of the Bretton Woods system.