A currency system in which governments try to keep constant the values of their currencies against another is called a ________ exchange rate system.

Question

Quizplus · Accepted Answer

In a fixed exchange rate system, governments set a specific exchange rate for their currency against another and try to maintain that rate by buying or selling their currency on the foreign exchange market. This is in contrast to a flexible exchange rate system, where the value of a currency is determined by market forces and can fluctuate freely. "Stable" and "consistent" are somewhat vague terms and could potentially apply to either a fixed or flexible exchange rate system.

A Currency System in Which Governments Try to Keep Constant