Consider the following statements:
1. Fixed-floating currencies are those whose relative value is determined by free-market forces.
2. A free-floating currency system is where a country’s governing body sets its currency’s relative value to other currencies.
3. Free-floating currencies include the Japanese yen while fixed floating currencies include Saudi riyal.

Which of the above statement(s) given above is/are correct?
(a) 1 only
(b) 3 only
(c) 1 and 3 only
(d) 1, 2 and 3

Question

Consider the following statements:
1. Fixed-floating currencies are those whose relative value is determined by free-market forces.
2. A free-floating currency system is where a country&rsquo;s governing body sets its currency&rsquo;s relative value to other currencies.
3. Free-floating currencies include the Japanese yen while fixed floating currencies include Saudi riyal.

Which of the above statement(s) given above is/are correct?
(a) 1 only
(b) 3 only
(c) 1 and 3 only
(d) 1, 2 and 3

ONLiNE UPSC · Accepted Answer

Statement 2 is not correct: The value of a country&rsquo;s currency depends on whether it is a &ldquo;free float&rdquo; or &ldquo;fixed float.&rdquo; Free-floating currencies are those whose relative value is determined by free-market forces, such as supply-demand relationships.

Statement 1 is not correct: A fixed float is where a country&rsquo;s governing body sets its currency&rsquo;s relative value to other currencies, often by pegging it to some standard.

Statement 3 is correct: Free-floating currencies include the U.S. dollar, Japanese yen, and British pound, while examples of fixed floating currencies include the Panamanian balboa and the Saudi riyal.

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M Question 1	⏱ 0
Consider the following statements: 1. Fixed-floating currencies are those whose relative value is determined by free-market forces. 2. A free-floating currency system is where a country’s governing body sets its currency’s relative value to other currencies. 3. Free-floating currencies include the Japanese yen while fixed floating currencies include Saudi riyal. Which of the above statement(s) given above is/are correct? (a) 1 only (b) 3 only (c) 1 and 3 only (d) 1, 2 and 3