The most important feature of a fixed exchange-rate system is that
A) markets establish the values for currencies.
B) central banks establish the values for their currencies.
C) governments establish the values for gold and silver.
D) governments establish the fixed values for their currencies.
E) governments buy and sell their currencies.

Question

Quizplus · Accepted Answer

The most important feature of a fixed exchange-rate system is that governments establish the fixed values for their currencies. This means that the exchange rate between two currencies is fixed and does not fluctuate based on market forces. The government will often have to intervene in the foreign exchange market to maintain the fixed exchange rate by buying or selling their currency.

The Most Important Feature of a Fixed Exchange-Rate System Is