Which of the following is an example of a managed float?
A) The Fed buys or sells U.S.dollars in order to maintain a fixed $1.05 per euro exchange rate.
B) The European Central Bank buys or sells euros in order to "peg" the price level.
C) The Bank of England buys or sells British pounds in order to maintain a fixed exchange rate with the U.S.dollar.
D) The Bank of Japan intervenes in the foreign exchange market to prevent a rapid depreciation of the yen.
E) The Bank of Japan intervenes to set the tax rate very close to the tax rates of other countries.

Question

Quizplus · Accepted Answer

A managed float is a flexible exchange rate system in which the central bank intervenes in the foreign exchange market to influence the value of its currency. Option D describes the Bank of Japan intervening in the foreign exchange market to prevent a rapid depreciation of the yen, which is an example of a managed float. Option A describes a fixed exchange rate system, option B describes a currency peg, option C describes a fixed exchange rate system, and option E describes a policy unrelated to exchange rates.

Which of the Following Is an Example of a Managed