A system in which governments intervene in foreign exchange markets to limit but not eliminate exchange rate fluctuations is referred to as

Question

Quizplus · Accepted Answer

A managed exchange rate system allows governments to interfere in foreign exchange markets to limit volatility in exchange rates, but does not completely eliminate fluctuations. This is different from a fixed exchange rate system, where the exchange rate is fixed to a specific value, or a floating exchange rate system, where the value is determined entirely by market supply and demand. Choice A is incorrect because speculative exchange rates do not involve government intervention. Choices B and D are not commonly used terms in international finance.

A System in Which Governments Intervene in Foreign Exchange Markets