A) Demand for foreign exchange and Supply of foreign exchange are equal
B) Demand for foreign exchange is less than Supply of foreign exchange
C) Demand for foreign exchange is less than Supply of foreign exchange
D) Determined by the central bank
Correct Answer: A
Solution :
Floating exchange rate is determined by the market forces of demand and supply. Like a general price determination, exchange rate is determined at a point where demand and supply are equal.
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