Loading...
UPSC 2012: 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?
(a)1, 2, 3 and 4
(b)2 and 3 only
(c)3 and 4 only
(d)1 and 4 only
Attempt This Question
Not attemptedCorrect Answer: (b) 2 and 3 only
Under a floating exchange-rate system, the external value of a currency is set by demand-and-supply forces. Global demand for a country’s goods and services (statement 2) raises demand for its currency, while investors’ confidence that the government is politically stable (statement 3) also supports the currency. The World Bank does not set exchange rates, and a country’s latent ‘economic potential’ by itself does not determine the day-to-day market price. Hence only statements 2 and 3 are correct. ([studyadda.com](https://www.studyadda.com/solved-papers/solved-paper-general-studies-2012_q50/772/355584?utm_source=openai))
Related UPSC Questions
More from External Sector & Balance Of Payments
2011moderate
Consider the following actions which the Government can take: 1. Devaluing the domestic currency. 2. Reduction in the export subsidy. 3. Adopting suit
2011moderate
Both Foreign Direct Investment (FDI) and Foreign Institutional Investor (FII) are related to investment in a country. Which one of the following state
2013moderate
Which of the following constitute Capital Account? 1. Foreign Loans 2. Foreign Direct Investment 3. Private Remittances 4. Portfolio Investment Select
Related Indian Economy Topics
2012Human Development, Poverty & Employment Schemes
How does the National Rural Livelihood Mission seek to improve livelihood options of rural poor? 1. By setting up a large number of new manufacturing
2012Human Development, Poverty & Employment Schemes
The Multi-dimensional Poverty Index developed by Oxford Poverty and Human Development Initiative with UNDP support covers which of the following? 1. D
Frequently Asked Questions
What is the correct answer to this UPSC 2012 Indian Economy question?▼
The correct answer is option (b): 2 and 3 only. 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 2012, GS Paper 1, as Question 79. 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.