When the foreign exchange market determines the relative value of a currency, we say that the country is adhering to a ________ regime.
A) currency board exchange
B) pegged exchange rate
C) fixed exchange rate
D) floating exchange rate

Question

Quizplus · Accepted Answer

When the foreign exchange market determines the relative value of a currency, we say that the country is adhering to a floating exchange rate regime. Four of the world's major trading currencies-the U.S. dollar, the European Union's euro, the Japanese yen, and the British pound-are all free to float against each other.

When the Foreign Exchange Market Determines the Relative Value of a Currency