The exchange rate system in which a country allows the value of the currency to be determined by the market forces of supply and demand is known as a

Question

Quizplus · Accepted Answer

A floating exchange rate system is one in which the value of the currency is determined by the market forces of supply and demand, without any fixed or predetermined value set by the government or central bank. This system allows for greater flexibility and responsiveness to changes in the global economy, but can also lead to greater volatility and fluctuations in exchange rates. Currency boards and pegged exchange rate systems involve some degree of government intervention or control over the value of the currency, while target zones involve a range of acceptable exchange rates within which the government seeks to maintain the value of the currency.

The Exchange Rate System in Which a Country Allows the Value