If a country allows the value of its currency to be determined in the foreign-exchange market, it has a _______ exchange rate.
A) fixed
B) floating
C) prime
D) key

Question

Quizplus · Accepted Answer

A floating exchange rate is one where the value of the currency is determined by supply and demand in the foreign exchange market. It can fluctuate on a daily basis based on a variety of economic factors. Conversely, a fixed exchange rate is one where the value of the currency is set and maintained by the government or central bank and does not fluctuate in response to market forces. Prime and key are not relevant terms in this context.

If a Country Allows the Value of Its Currency to Be