Question

Consider the following the statements:
The price of any currency in international market is decided by the
1) World Bank.
2) demand for goods/services provided by the country concerned.
3) stability of the government of the concerned country.
4) economic potential of the country in question.
Which of the statement(s) given above is/are correct?

• A. 1, 2, 3 and 4
• B. 2 and 3
• C. 3 and 4
• D. 1 and 4

Answer 1

The correct option is B 2 and 3

The price of any currency is international market is determined by the forces of demand and supply. Demand for a currency increases if the demand for the goods and services provided by that country increases. Moreover, a stable Govt gives confidence to investors and raises the demand for currency of that country.