A Floating Exchange Rate System Is One in Which

question 40

Multiple Choice

A floating exchange rate system is one in which

• A) the currency is backed by a fixed amount of gold.
• B) 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.
• C) foreign exchange traders accept only a fixed price for their goods, regardless of the demand and supply for the currency.
• D) demand and supply adjust so that there are no shortages or surpluses of currency in the market.