Which of the Following Is True of a Floating Exchange

question 24

Multiple Choice

Which of the following is true of a floating exchange rate policy?

• A) This policy sets the exchange rate of the domestic currency in terms of another currency.
• B) It prevents erratic fluctuations that may trigger macroeconomic turbulence.
• C) Exchange rate is allowed to fluctuate between an upper and lower range.
• D) Governments believe in the free market and allow it to determine exchange rates.

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Definitions:

Debit Side

The Debit Side of an account records increases in assets or expenses and decreases in liabilities, equity, and income in double-entry bookkeeping.

Rules Of Debit

Rules governing the increase or decrease in account balances within the double-entry bookkeeping system, where debits typically increase assets or expenses and decrease liabilities, equity, and revenue.

Credit Side

The right side of an accounting entry, indicating increases in liabilities, revenues, and equity, and decreases in assets and expenses.

Normal Balance

The side (debit or credit) on which increases to an account are recorded, depending on the type of account.