| Consider the following: |
| The price of any currency in international market is decided by the: |
| 1. World Bank |
| 2. Demand for goods/services provided by the country concerned. |
| 3. Stability of the government of the concerned country. Choose the correct one: |
A) Only 1 and 2
B) Only 2 and 3
C) Only 1 and 3
D) All 1, 2 and 3
Correct Answer: B
Solution :
[b] The market determines a floating exchange rate. In other words, a currency is worth whatever buyers are willing to pay for it. This is determined by supply and demand, which is in turn driven by foreign investment, import/export ratios, inflation, and a host of other economic factors.
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