Question : In a floating exchange rate system, the exchange rate is determined by market forces, and fluctuations in the rate are caused by changes in ________.
Option 1: government policies
Option 2: inflation rates
Option 3: interest rates
Option 4: supply and demand
Correct Answer: supply and demand
Solution : The correct answer is (d) supply and demand
In a floating exchange rate system, the exchange rate is primarily determined by market forces, specifically the forces of supply and demand in the foreign exchange market. Fluctuations in the exchange rate occur due to changes in supply and demand for currencies.
Question : In a floating exchange rate system, exchange rates are determined by:
Question : In a floating exchange rate system, the exchange rate is primarily determined by:
Question : Which of the following exchange rate systems allows the exchange rate to be determined solely by market forces of supply and demand?
Question : A ________ exchange rate is determined by the forces of supply and demand in the foreign exchange market.
Question : It refers to a system in which exchange rate is determined by forces of demand and supply of different currencies in the foreign exchange market.
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