Intervention by central banks in the flexible exchange rate system is called:

Question

Quizplus · Accepted Answer

Intervention by central banks in the flexible exchange rate system is called a dirty float, where the central bank may manipulate or intervene in the foreign exchange market to achieve certain policy objectives such as stabilizing the exchange rate or maintaining price stability. In contrast, a clean float (A) refers to a situation where the central bank does not intervene in the foreign exchange market, while a flexible float (B) is the same as a dirty float. Usage of Special Drawing Rights (D) is a mechanism used by the International Monetary Fund, but it is not directly related to central banks' interventions in the foreign exchange market.

Intervention by Central Banks in the Flexible Exchange Rate System