Multiple choice

A currency whose exchange rate tends to fall because of persistent balance of payment deficit is known as:

  1. Hard currency

  2. Soft currency

  3. Sinking currency

  4. Gold currency

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A soft currency is one that is expected to fluctuate or depreciate in value due to persistent balance of payment deficits or political instability. In contrast, a hard currency is stable and widely accepted in international trade.