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Economics (AS & A Level) · May / June 2026 · Paper 11 · Question 28

9708Exchange rates

Why may a government introduce a floating exchange rate?

  1. Ait allows government more independence in policy making
  2. Bit eliminates the instability of free markets
  3. Cit gives firms more confidence in future costs and prices
  4. Dit increases foreign exchange reserves

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Correct answer: A. it allows government more independence in policy making

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