Economics 9708 · AS & A Level · 6.4

6.4 — practice question

Under a floating exchange rate system, what factors set the foreign exchange value of a currency?

  • Athe overall supply of and demand for a currency on currency markets
  • Bthe purchasing power of the currency relative to the purchasing power of foreign currencies
  • Cthe surplus or deficit on the balance of payments on current account
  • Dthe differential between domestic and foreign interest rates

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