Changes in the value of currencies:
A)occur only in floating currency systems.
B)can occur in floating currency systems,in managed floating systems,and even in fixed systems.
C)occur only in floating and managed floating currency systems.
D)occur uniformly in all currency systems.

Question

Quizplus · Accepted Answer

Changes in the value of currencies can occur in all three currency systems - floating, managed floating, and fixed. In a floating currency system, the exchange rate is determined by market forces of supply and demand. In a managed floating system, the central bank intervenes in the foreign exchange market to manage the value of their currency. In a fixed system, the exchange rate is fixed to another currency or a basket of currencies, but changes can still occur due to changes in the economic fundamentals of the country or the corresponding currency. Therefore, the correct answer is B.

Changes in the Value of Currencies