Which exchange rate system requires an immediate response by a government to counter all market forces on exchange rates?

Question

Quizplus · Accepted Answer

In a fixed exchange rate system, the government sets a specific exchange rate between its currency and another currency, and it has to intervene in the market to maintain this fixed rate. As a result, any changes in market forces that affect the exchange rate require an immediate response from the government to counter them. In contrast, the managed float system allows for some fluctuation in market forces, while the floating exchange rate system allows for full market determination of the exchange rate. The Bretton-Woods system was a fixed exchange rate system used from 1944 to 1971.

Which Exchange Rate System Requires an Immediate Response by a Government