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World geography miscellaneous

  1. A currency having a falling exchange rate due to continuing balance of payments deficit is called a
    1. Soft currency
    2. Hard currency
    3. Scarce currency
    4. Surplus currency
Correct Option: A

Soft currency is a currency with a value that fluctuates as a result of the country's political or economic uncertainty which may be due to balance of payments problem. Currencies from most developing countries are considered to be soft currencies. Often, governments from these developing countries will set unrealistically high exchange rates, pegging their currencies to a currency such as the U.S. dollar



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