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Economics · May / June 2026 · Paper 11 · Question 29

2281Foreign exchange rates

What is least likely to be a benefit of a floating exchange rate system?

  1. AIt gives greater freedom to change the interest rate.
  2. BIt helps determine the market value of a currency.
  3. CIt provides greater certainty and stability.
  4. DIt reduces the requirement to keep foreign exchange reserves.

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Correct answer: C. It provides greater certainty and stability.

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