An exchange rate ________.
A) is the rate at which the currency of one nation can be exchanged for that of another
B) has little impact on balance of trade
C) tends to be fixed between two countries
D) tends to fluctuate a great deal on a daily basis

Question

Quizplus · Accepted Answer

An exchange rate is the rate at which the currency of one nation can be exchanged for that of another. This rate tends to fluctuate a great deal on a daily basis as it is affected by various factors such as economic conditions, political events, and market sentiments among others. Therefore, option A is the correct answer. Option B is incorrect because an exchange rate has a significant impact on balance of trade, while option C is wrong since exchange rates are not fixed but rather dynamic.

An Exchange Rate ________