A 'Floating Exchange Rate System' Is One in Which

question 125

Multiple Choice

A 'floating exchange rate system' is one in which:

• A)the central bank does not intervene to adjust the exchange rate.
• B)shortages of foreign exchange will result in an appreciation of the domestic currency.
• C)foreign exchange traders accept only a fixed price for their goods, regardless of the demand and supply for the currency.
• D)the government defines its currency to be worth a certain amount in terms of another currency and ensures that the rate remains at that level.

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Definitions:

Quantity Supplied

The amount of a good or service that producers are willing and able to sell at a given price.

Excess Demand

A situation in which the demand for a product exceeds the supply at a set price, leading to shortages.

Bluetooth Headsets

Wireless headsets that use Bluetooth technology to connect with devices such as smartphones, computers, or other electronic devices for audio transmission.

Quantity Demanded

The amount of a good or service that buyers are willing and able to purchase at a specific price.