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
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.
Question : Which of the following exchange rate systems allows the exchange rate to be determined solely by market forces of supply and demand?
Question : Which of the following exchange rate systems allows the exchange rate to be freely determined by market forces but with occasional central bank intervention?
Question : In a floating exchange rate system, exchange rates are determined by:
Question : It refers to a system in which exchange rate is determined by forces of demand and supply of different currencies in the foreign exchange market.
Question : In a floating exchange rate system, the exchange rate is primarily determined by:
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