When exchange rates are very volatile, with a wide range of variation, the currency is said to be:
A) in limbo.
B) in free float.
C) perfectly flexible.
D) in sluggish float.

Question

Quizplus · Accepted Answer

When exchange rates are very volatile with a wide range of variation, the currency is said to be in a free float. This means that the exchange rate is determined by market forces and is not heavily influenced by government intervention or central bank policies. In a free float, the exchange rate can fluctuate widely and rapidly, depending on various factors such as economic indicators, political events, and investors' sentiments.

When Exchange Rates Are Very Volatile, with a Wide Range