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UPSC 1998: Consider the following statements: The price of any currency in the international market is decided by the I. World Bank II. demand for goods/services provided by the country concerned III. stability of the government of the concerned country IV. economic potential of the country in question Of these statements:
(a)I, II, III and IV are correct
(b)II and III are correct
(c)III and IV are correct
(d)I and IV are correct
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Not attemptedCorrect Answer: (b) II and III are correct
In a floating system a currency’s external value is set by market demand and supply. Greater demand for a country’s goods/services (statement II) and confidence arising from political stability (statement III) raise that demand. The World Bank (I) plays no role, and ‘economic potential’ (IV) is too indirect; therefore only statements II and III are correct. ([sarthaks.com](https://www.sarthaks.com/2764916/consider-following-statements-currency-international-market-decided-demand-services?utm_source=openai))
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Frequently Asked Questions
What is the correct answer to this UPSC 1998 Indian Economy question?▼
The correct answer is option (b): II and III are correct. Watch the detailed video explanation in our Sherlocking Prelims course on UnlockIAS.
Which year was this External Sector & Balance Of Payments question asked in UPSC Prelims?▼
This question was asked in UPSC CSE Prelims 1998, GS Paper 1, as Question 16. It falls under Indian Economy > External Sector & Balance Of Payments.
What is the difficulty level of this UPSC question?▼
This question is rated "moderate". It requires sound conceptual understanding of the topic.
How many UPSC Prelims questions have been asked from External Sector & Balance Of Payments?▼
UPSC has asked 49 questions from External Sector & Balance Of Payments (under Indian Economy) across multiple years. Visit the topic page to see the full list and year-wise trends.