Q79.
Consider the following 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 statements given above are correct?
Answer
B
Explanation
The price (exchange rate) of a currency in the international market is determined by market forces of supply and demand. Key determinants include: demand for the country's goods and services (statement 2 — more exports = more demand for currency = stronger currency) and political/government stability (statement 3 — political stability attracts investment, strengthening the currency). Statement 1 is incorrect — the World Bank does NOT determine currency prices. Statement 4 is debatable — economic potential is a long-term factor but is already reflected in demand for goods/services.