An Exchange Rate That Varies According to the Supply and Demand

question 124

Multiple Choice

An exchange rate that varies according to the supply and demand for the currency in the foreign exchange market is called a ______ exchange rate.

• A) real
• B) nominal
• C) fixed
• D) flexible

---

Definitions:

U.S. Dollar

The official currency of the United States, widely used as a benchmark and reserve currency globally.

Trade Deficit

A situation where a country's imports exceed its exports, resulting in a negative balance of trade.

Dollar Denominated Bonds

Bonds issued in the United States that are payable in U.S. dollars, irrespective of the issuer's nationality.

Eurobonds

Bonds issued in a currency other than the home currency of the country or market in which it is issued, often used by companies to raise capital in international markets.