Under a Floating System, the Exchange Rate

question 79

Multiple Choice

Under a floating system, the exchange rate:

• A) fluctuates in response to changing economic conditions.
• B) is maintained at a predetermined level by the central bank.
• C) is changed at regular intervals by the central bank.
• D) fluctuates in response to changes in the price of gold.

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Definitions:

Drawee

The party directed by a draft or check to pay a certain amount of money, typically a bank.

Payee

The individual or entity to whom money is paid or owes to be paid.

Negotiable Instrument

A negotiable instrument is a written document guaranteeing the payment of a specific amount of money, either on demand or at a set time, with the characteristic of being transferable by endorsement or delivery.

Validity

Validity refers to the state of being legally sound, effective, or binding; it is the quality of conforming to law or fact.