The international adjustment mechanism for flexible exchange rates is the same as for managed float regimes.

Question

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In a flexible exchange rate system, exchange rates are determined by the market forces of supply and demand without government intervention. In contrast, a managed float regime involves some level of government intervention to influence the exchange rate, though not to the extent of fixing it entirely. Thus, the adjustment mechanisms differ between the two, with the market playing a more significant role in flexible exchange rates and government policies influencing managed floats.

The International Adjustment Mechanism for Flexible Exchange Rates Is the Same