The current system of exchange rates can best be described as
A) freely ﬂuctuating exchange rates.
B) managed ﬂoating exchange rates.
C) rigidly ﬁxed exchange rates.
D) an adjustable peg system.

Question

Quizplus · Accepted Answer

The current system of exchange rates is a managed floating system, which means that exchange rates are determined by market forces but central banks may intervene in the foreign exchange market to stabilize the exchange rate. This is different from freely fluctuating exchange rates, where exchange rates are solely determined by market forces without any intervention, and rigidly fixed exchange rates, where exchange rates are fixed to a specific value with no flexibility. The adjustable peg system was used in the past but is not the current system of exchange rates.

The Current System of Exchange Rates Can Best Be Described