A flexible or floating exchange rate system is one in which the:
A) government closely monitors and controls the value due to trade flows.
B) government makes no attempt to fix it against any base currency.
C) government actively tries to achieve fluctuations in the rate.
D) government fixes the rate against the currency of its largest trading partner.

Question

Quizplus · Accepted Answer

In a flexible or floating exchange rate system, the government does not intervene to fix the exchange rate against any particular base currency. Instead, the exchange rate is determined by market forces of supply and demand for the currency.

A Flexible or Floating Exchange Rate System Is One in Which