What Is a Fixed Exchange Rate

question 2

Multiple Choice

What is a fixed exchange rate?

• A)A monetary system in which the exchange rates of major currencies retain nearly the same value with respect to the U.S.dollar but are allowed to fluctuate during crises.
• B)A monetary system in which the exchange rates of currencies are set at a permanent price of another currency or a precious metal.
• C)A monetary system in which the exchange rates of major currencies retain nearly the same value with respect to gold but are periodically adjusted in response to currency crises.
• D)A monetary system in which exchange rates are allowed to change according to their market price.
• E)A trading system in which governments limit how many goods can be sent between countries.

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Definitions:

Check-clearing Process

The method through which banks collect and settle the amount of a check, transferring funds from one account to another.

Movability

The characteristic of an asset that allows it to be transferred or moved from one location to another.

Commission

A fee or percentage of a transaction value paid to an agent or company for facilitating a service, such as a sale or real estate transaction.

Negotiable

Capable of being discussed and modified in a transaction or agreement.