An exchange rate is said to be floating if
A) it cannot decrease
B) it fluctuates greatly over short periods of time
C) there is a value (fixed by government) below which it cannot fall
D) it is a free-market rate
E) it is determined solely by demand

Question

Quizplus · Accepted Answer

Floating exchange rates are determined by the free market, that is, by supply and demand forces in the foreign exchange market, without direct government intervention to fix its value.

An Exchange Rate Is Said to Be Floating If