The government of Ambria generally does not interfere in the value of the nation's currency. However, recently when the nation faced a severe financial crisis leading to its currency being depreciated to a great extent, the government decided to explicitly intervene by increasing the supply of money. In this scenario, the Ambrian government can be said to be engaging in a _____.
A) managed float
B) clean float
C) fixed float
D) spreader float

Question

Quizplus · Accepted Answer

A managed float, also known as a dirty float, occurs when a government intervenes in the foreign exchange market to influence the value of its currency, which is what the Ambrian government is doing by increasing the supply of money to address the currency depreciation.

The Government of Ambria Generally Does Not Interfere in the Value