An exchange rate system where currency values are determined by the forces of supply and demand and where currency values fluctuate in response to changes in supply and demand is called a(n)

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A floating (flexible) exchange rate system is characterized by currency values that fluctuate based on the forces of supply and demand. In this system, the government or central bank does not intervene to fix or manage the exchange rate, hence the term "floating." A fixed exchange rate system (choice A) is one in which the government or central bank sets a specific exchange rate that does not fluctuate. A managed float exchange rate system (choice C) is a hybrid of fixed and floating systems where the government or central bank occasionally intervenes to influence the exchange rate. The international financial system (choice D) refers to the framework and institutions that facilitate global financial transactions and economic interactions. While exchange rates are a key part of the international financial system, this term is broader in scope.

An Exchange Rate System Where Currency Values Are Determined by the Forces