Economics 9708 · AS & A Level · 6.4

6.4 — practice question

Which combination shows that a country operates a freely floating exchange rate?

  • Anominal exchange rate depreciates by 20%; foreign currency reserves decrease by $1 billion
  • Bnominal exchange rate depreciates by 20%; foreign currency reserves unchanged
  • Cnominal exchange rate unchanged; foreign currency reserves decrease by $1 billion
  • Dnominal exchange rate unchanged; foreign currency reserves unchanged

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