In an independent floating currency system,official intervention is:
A)intended to moderate changes in the exchange rate rather than to set the exchange rate.
B)not allowed because the value of the currency is to be set by market forces.
C)taken only to maintain the predetermined exchange rate.
D)allowed only indirectly as through changing official interest rates.

Question

Quizplus · Accepted Answer

In an independent floating currency system, the exchange rate is determined by market forces of supply and demand. Official intervention is not intended to set the exchange rate but rather to smooth out abrupt or volatile changes in the exchange rate. Therefore, option A is the best choice.

In an Independent Floating Currency System,official Intervention Is