Question : Which of the following is not a factor that affects the exchange rate?
Option 1: Interest rates
Option 2: Inflation rates
Option 3: Government spending
Option 4: Political stability
Answer (1)
19th Jan, 2024
Correct Answer: Government spending
Solution : The correct answer is (c) Government spending
Government spending is not a direct factor that affects the exchange rate. While government spending can have indirect effects on the economy and, in turn, influence factors that affect the exchange rate, it is not a direct determinant of the exchange rate.
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