What does it signify when a currency is described as 'strong'?

When a currency is referred to as 'strong,' it indicates that it holds a high value relative to other currencies. This high relative value often means that it could buy more foreign currency compared to a weaker currency. A strong currency can positively affect a country's economy, as it makes imports cheaper and can help to reduce inflation because foreign goods will cost less.

Furthermore, a strong currency can reflect confidence in the country's economy, financial stability, and geopolitical standing, leading to greater investor confidence and potentially attracting foreign investments. The distinction between strong and weak currencies is critical in understanding foreign exchange rates, trade balance, and economic policy implications.

While stability and low inflation are benefits that may accompany strong currencies, they are not definitive characteristics. Such qualities can exist in various economic circumstances, so option A accurately captures the fundamental meaning of a strong currency.