Economics Multiple Choice Question – 28 September 2021

Under a system of floating exchange rates, what determines the foreign exchange value of a currency?

Select ONE answer:

1. the overall supply of and demand for a currency on currency markets
2. the purchasing power of the currency relative to the purchasing power of foreign currencies
3. the surplus or deficit on the balance of payments on current account
4. the differential between domestic and foreign interest rates

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Economics KS4 and KS5 classes.

The answer is 1

1. Correct
2. Not correct
3. Not correct
4. Not correct

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