9. A flexible or floating exchange rate system is one in which the: A) governmen
ID: 1124951 • Letter: 9
Question
9.
A flexible or floating exchange rate system is one in which the:
A)
government closely monitors and controls the value due to trade flows.
B)
government makes no attempt to fix it against any base currency.
C)
government actively tries to achieve fluctuations in the rate.
D)
government fixes the rate against the currency of its largest trading partner.
9.
A flexible or floating exchange rate system is one in which the:
A)
government closely monitors and controls the value due to trade flows.
B)
government makes no attempt to fix it against any base currency.
C)
government actively tries to achieve fluctuations in the rate.
D)
government fixes the rate against the currency of its largest trading partner.
Explanation / Answer
Answer :- Option B). government makes no attempt to fix it against any base currency.
Explanation :- Flexible or floating rate of exchange is that rate which is determined by the demand for and supply of different currencies in the foreign exchange market. Under the flexible exchange system, Foreign exchange rate is not officially fixed against the any other base currency by the government. In other words, Government makes no attempt to fix the foreign exchange rate against any other base currency in flexible exchange rate system.
Conclusion :- Option B).
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