A) Balance of Trade is a component of capital account of Balance of Payments.
B) Floating exchange rate is used to stabilize price of foreign currency.
C) Increase in the supply of foreign exchange rate leads to fall in its price.
D) Rise in exchange rate leads to revaluation of currency.
Correct Answer: C
Solution :
When supply of foreign exchange increase it leads to inflow of foreign currency and recorded on credit side of BoP. Further, it leads to fall in exchange rate and improvement in BoT.
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