Which of the following best describes a rate in which selective government intervention works hand-in-hand with allowing markets the freedom to work themselves out?
A) Floating rate
B) Fixed rate
C) Dirty float rate
D) Target exchange rate

Question

Quizplus · Accepted Answer

The term "dirty float rate" best describes a system in which the government intervenes selectively while still allowing market forces to take effect. In this system, the government may adjust the exchange rate as needed but still lets supply and demand determine the rate to some extent. A fixed rate is a system in which the government sets a specific exchange rate and maintains it, while a floating rate allows market forces to completely determine the exchange rate without government intervention. A target exchange rate is a specific rate that the government aims to achieve by intervening in the market. A dirty float rate is a currency valuation method where the exchange rate is allowed to float or adjust based on the market forces of supply and demand, but with some intervention from the government to control excessive volatility or to achieve other economic objectives. This option best describes selective government intervention working together with market freedom. The other options do not suggest government intervention.

Which of the Following Best Describes a Rate in Which