The term "dirty float" is used to describe a:

Question

Quizplus · Accepted Answer

Dirty float is a system where a country's currency value is allowed to fluctuate like any other currency, but the government or central bank sometimes intervenes in the foreign exchange market to influence the currency's value. This intervention can be done to achieve certain economic goals, such as maintaining export competitiveness or controlling inflation. Therefore, choice D is the correct answer.

Choice A is incorrect because the term "dirty float'' does not refer to a currency that is only allowed to float in prosperous times.

Choice B is incorrect because the term "dirty float'' does not refer to a nation that switches from free to fixed rates of exchange.

Choice C is incorrect because the term "dirty float'' does not refer to a black market in foreign currencies, but rather a form of currency exchange in which a currency is allowed to fluctuate with the market but is sometimes influenced by government intervention.

The Term "Dirty Float" Is Used to Describe A