In Which Exchange Rate System Do Central Banks Always Stand

question 37

Multiple Choice

In which exchange rate system do central banks always stand ready to buy and sell their currency at a predetermined price?

• A)a floating exchange rate system
• B)a flexible exchange rate system
• C)a managed exchange rate system
• D)a fixed exchange rate system
• E)a dirty floating exchange rate system

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Definitions:

Profit

The financial gain obtained when the amount earned from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity.

Good

A tangible product or commodity that satisfies human wants or needs.

Resources

An input used to produce economic goods. Land, labor, skills, natural resources, and human-made tools and equipment provide examples. Throughout history, people have struggled to transform available, but limited, resources into things they would like to have—economic goods.

Demand Falls

This occurs when there is a decrease in the desire or willingness of consumers to purchase a good at a given price, leading to potential shifts in the market equilibrium.