In a free market, the price of any currency is determined by supply and demand. True or False?

In a free market, currency prices are indeed determined by the principles of supply and demand. This means that the value of a currency can fluctuate based on how much of that currency is available (supply) compared to how much people want to use it (demand). For example, if more investors wish to acquire a currency due to positive economic conditions in that country, demand for that currency increases, leading its price to rise. Conversely, if a currency is in excess supply with fewer people wanting to hold it, its value will tend to decrease.

In addition, factors such as interest rates, economic stability, inflation, and geopolitical events can influence both supply and demand, thereby affecting currency pricing in a free market environment. Therefore, the principle that the price of any currency in a free market is determined by supply and demand is accurate and reflects foundational economic theories.