Question on: JAMB Economics - 2014
A major determinant of floating exchange rate is
A
the highest denomination of the currency
B
an Act of the parliament
C
the system of government
D
the forest of demand and supply
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Correct Option: D
The correct answer is **the forces of demand and supply**.
A floating exchange rate is determined by the market forces of supply and demand for a currency. The value of the currency fluctuates freely based on these forces.
* **Demand:** Higher demand for a currency will increase its value.
* **Supply:** Higher supply of a currency will decrease its value.
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