Under flexible exchange rates, the exchange rate is set by
A) the International Monetary Fund.
B) the U.S. Federal Reserve's Board of Governors.
C) the intersection of demand and supply curves in the currency markets.
D) negotiations among central banks of the major industrial powers.

Question

Quizplus · Accepted Answer

Under flexible exchange rates, the exchange rate is determined by the intersection of the demand and supply curves in the currency markets. The market forces of supply and demand for a currency determine its value in relation to other currencies. There is no single entity or organization that sets the exchange rate.

Under Flexible Exchange Rates, the Exchange Rate Is Set by