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Explain the detemination of equilibrium...

Explain the detemination of equilibrium exchange rate in foreign exchange market.
OR
Equilibrium rate of exchange is determined when the demand for foreign exchange is equal to its supply. Explain this statement

Answer

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Knowledge Check

  • Foreign exchange is a stock of

    A
    foreign currencies
    B
    securities issued by foreign corporates
    C
    bonds issued by foreign corporates
    D
    all of these
  • When foreign exchange rate rises, the demand of foreign exchange

    A
    rises
    B
    falls
    C
    does not change
    D
    none of these
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