A country that regulates the rate at which its currency is exchanged for all other currencies is considered to have a ________ exchange rate system.

Question

Quizplus · Accepted Answer

A fixed or managed exchange rate system is one in which the government or central bank of a country sets a specific exchange rate for its currency against other currencies and takes actions to maintain that rate. This contrasts with a floating or flexible exchange rate system, in which the value of a currency is determined by market forces without government intervention. Forward and spot rates are not types of exchange rate systems, but rather refer to the timing of currency exchanges.

A Country That Regulates the Rate at Which Its Currency