What implication does the relative economic strength approach suggest?

The relative economic strength approach emphasizes the relationship between a country's economic performance and its currency value. It suggests that when a country experiences strong economic growth, this typically leads to higher demand for its currency. Increased economic activity can attract foreign investment and lead to greater demand for goods and services priced in the domestic currency. This heightened demand for the currency tends to cause its value to appreciate against other currencies.

In contrast to the other statements, the implication of strong economic growth resulting in currency appreciation is grounded in the fundamental principles of supply and demand in foreign exchange markets. When a nation’s economy is performing well, the overall outlook for that economy becomes more favorable to investors, which can enhance currency value through increased purchasing power and favorable trade balances.

It's essential to note that while the other options may touch on various economic concepts, they do not align as directly with the principles underpinning the relative economic strength approach, which posits a clear connection between economic performance and currency valuation.