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Question
In a system of flexible exchange rates, the exchange rate is determined by the forces of ______
Options
Market demand
Market supply
Both Market demand and Market supply
None of these
MCQ
Fill in the Blanks
Solution
Both Market demand and Market supply
Explanation:
The exchange rate in a flexible exchange rate system (also known as floating exchange rates) is determined by market demand and supply.
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Foreign Exchange Market - Determination of the Exchange Rate
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