With flexible exchange rates

Name: With flexible exchange rates
Brand: Quizplus
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Question

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With flexible exchange rates, the equilibrium exchange rate is determined in a foreign exchange market based on the supply and demand for different currencies. The balance of trade may not necessarily be zero, and countries may use foreign exchange reserves to offset balance-of-payment deficits. It is possible for countries to run either a trade surplus or trade deficit depending on their economic conditions and policies.

With Flexible Exchange Rates