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JAMB Economics 2014 Question 46

Question 46

Balance of Payments and Exchange Rates

A major determinant of a floating exchange rate is

  1. A.the system of government.
  2. B.the forces of demand and supply.
  3. C.the highest denomination of the currency.
  4. D.an Act of the parliament.
Show the answer and explanation

Answer: B (the forces of demand and supply.)

Explanation

Under a floating system the value of a currency is left to the market: demand for and supply of the currency.