Under a(n)_____________ ,the nation's monetary authorities are entrusted with the responsibility of intervening in foreign exchange markets to smooth out short-run fluctuations in exchange rates without attempting to affect their long-run trend.
A)currency board arrangements
B)adjustable peg system
C)crawling peg system
D)managed floating exchange rate system

Question

Quizplus · Accepted Answer

The managed floating exchange rate system allows for short-term interventions by the monetary authorities to stabilize exchange rate fluctuations while allowing market forces to determine the long-term trend. It is a flexible system that provides some degree of stability while also allowing for adjustments in response to changing economic conditions. The other options (A, B, and C) are more rigid systems that do not allow for as much flexibility in response to market conditions.

Under A(n)_____________ ,The Nation's Monetary Authorities Are Entrusted with the Responsibility