If Foreign Exchange Rates Are Determined by the Interaction of Supply

question 179

Multiple Choice

If foreign exchange rates are determined by the interaction of supply and demand forces for the various currencies, then the exchange rate is:

• A) fixed.
• B) government-determined.
• C) set by the value of gold.
• D) floating.
• E) improper.

---

Definitions:

Service

A type of economic activity that is intangible, is not stored, and does not result in ownership; services are produced and consumed at the same time.

Exchange

The act of giving one thing and receiving another in return, often referring to the trade of goods, services, or financial instruments.

Functions Of Money

The core roles money plays in an economy, including serving as a medium of exchange, a unit of account, a store of value, and sometimes, a standard of deferred payment.

Medium Of Exchange

An intermediary instrument or system used to facilitate the sale, purchase, or trade of goods between parties.