If a country allows its currency's value to be determined in the market for foreign exchange, it has a:
A) fixed exchange rate.
B) floating exchange rate.
C) prime exchange rate.
D) key exchange rate.

Question

Quizplus · Accepted Answer

If a country allows its currency's value to be determined in the market for foreign exchange, it has a floating exchange rate. A fixed exchange rate is when the government or central bank sets the value of the currency in relation to another currency or basket of currencies. The terms prime exchange rate and key exchange rate are not commonly used in the field of economics.

If a Country Allows Its Currency's Value to Be Determined