When countries agree to keep the exchange rates between their countries at an unchanging rate, the exchange rate system is called a:
A)fixed exchange rate system.
B)pegged exchange rate system.
C)pre-determined exchange rate system.
D)managed float exchange rate system.

Question

Quizplus · Accepted Answer

A fixed exchange rate system involves countries agreeing to keep their exchange rates at a specific, unchanging rate. This is different from a pegged exchange rate system, which allows for slight fluctuations within a specific range. A pre-determined exchange rate system may refer to either of these systems, but does not provide enough information to fully answer the question. A managed float exchange rate system allows for greater flexibility in exchange rates and involves some government intervention, which is not present in a fixed exchange rate system.

When Countries Agree to Keep the Exchange Rates Between Their