__________ exchange rates exist when a government establishes official rates of exchange for its currency,whereas __________ exchange rates exist when exchange rates are determined by global currency markets.

Question

Quizplus · Accepted Answer

In fixed exchange rates, the government or central bank sets an official rate of exchange for its currency, while in floating exchange rates, exchange rates are determined by global currency markets. Managed float is a system in which a currency's exchange rate is allowed to fluctuate, but central banks may intervene in the market to influence the exchange rate. Hard exchange rates do not exist as a commonly used term in economics.

__________ Exchange Rates Exist When a Government Establishes Official Rates