Question : A ________ exchange rate is determined by the forces of supply and demand in the foreign exchange market.
Option 1: fixed
Option 2: floating
Option 3: managed
Option 4: pegged
Answer (1)
10th Jan, 2024
Correct Answer:
floating
Solution : The correct answer is (b) floating.
A floating exchange rate is determined by the forces of supply and demand in the foreign exchange market. In this system, the exchange rate fluctuates freely based on market conditions and the balance of supply and demand for different currencies. The exchange rate is not fixed or pegged to a specific value or currency.
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