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WAEC Economics 2021 Question 41

Question 41

Balance of Payments and Exchange Rates

A floating exchange rate means that the exchange rate is fixed by the

  1. A.central bank of the country.
  2. B.forces of demand and supply
  3. C.International Monetary Fund (IMF).
  4. D.Ministry of Finance.
Show the answer and explanation

Answer: B (forces of demand and supply)

Explanation

A floating rate is set by demand for and supply of the currency.