Recently,the Republic of Manoonistan moved to an exchange rate system under which its exchange rate is allowed to fluctuate against other currencies within a target zone.The Republic of Manoonistan's exchange rate system is called a(n)

Question

Quizplus · Accepted Answer

The Republic of Manoonistan's exchange rate system, which allows its exchange rate to fluctuate within a target zone, is called an adjustable peg system. This is because while the currency's exchange is not completely free-floating, it is allowed to fluctuate to a certain extent within a predetermined range or band. A free float system would allow for unrestricted fluctuations in the exchange rate, while a fixed peg system would involve fixing the currency's exchange rate to a particular foreign currency. A pure float system and capital float system do not exist as standard exchange rate systems.

Recently,the Republic of Manoonistan Moved to an Exchange Rate System