If a country has a ________ exchange rate,its central bank must buy and sell its holdings of currencies to maintain a given exchange rate.
A)floating
B)flexible
C)fixed
D)all of the above

Question

Quizplus · Accepted Answer

A country with a fixed exchange rate has a predetermined exchange rate with another currency, and its central bank must buy and sell its holdings of currencies to maintain that fixed rate. A floating exchange rate allows market forces to determine the exchange rate, and a flexible exchange rate is similar to a floating rate but with some government intervention. Therefore, options A and B are incorrect.

If a Country Has a ________ Exchange Rate,its Central Bank