A ________ exchange rate means that the rate changes constantly depending on the quantity supplied and demanded for the currency.

Question

Quizplus · Accepted Answer

A floating exchange rate means that the rate is determined by market forces of supply and demand, so it can fluctuate continuously. In contrast, a fixed exchange rate is set by a government or central bank and does not change. A banded exchange rate is a type of floating exchange rate where the rate is allowed to fluctuate within a certain range, but is still influenced by market forces.

A ________ Exchange Rate Means That the Rate Changes Constantly