Since the early 1970s, exchange rates among major currencies have been free to float, with ________ determining the relative value of a currency. Thus, each day a currency's price relative to that of another freely floating currency may stay the ________.

Question

Quizplus · Accepted Answer

Since the early 1970s, exchange rates among major currencies have been free to float, with market forces determining the relative value of a currency. Thus, each day a currency's price relative to that of another freely floating currency may stay the same, increase, or decrease depending on the market forces. Therefore, choice D is the best answer. Choice A is incorrect because risk/beta forces do not determine the value of a currency. Choice B is incorrect because the currency's price may decline due to market forces. Choice C is incorrect because risk/beta forces do not determine the value of a currency, and the currency's price may decline due to market forces.

Since the Early 1970s, Exchange Rates Among Major Currencies Have