Asked by Lionell Martin Jr on May 18, 2024
Verified
Freely floating exchange rates are determined by
A) the forces of supply and demand for currencies.
B) the government with a trade surplus.
C) the government with a trade deficit.
D) the IMF.
E) the Bretton Woods Agreement.
Freely Floating Exchange Rates
A system where the value of currencies is determined by supply and demand in the foreign exchange market without direct intervention by central banks.
Bretton Woods Agreement
An agreement established in 1944 which set up an international monetary system based on fixed exchange rates and established the International Monetary Fund (IMF) and the World Bank.
- Comprehend the mechanisms and implications of floating and fixed exchange rates.
- Understand the role of supply and demand in determining freely floating exchange rates.
Verified Answer
FJ
Felicia Jackson-McCoyMay 20, 2024
Final Answer :
A
Explanation :
Freely floating exchange rates are determined by the forces of supply and demand for currencies in the foreign exchange market. It is not determined by government policies, international organizations such as the IMF, or agreements like the Bretton Woods Agreement.
Learning Objectives
- Comprehend the mechanisms and implications of floating and fixed exchange rates.
- Understand the role of supply and demand in determining freely floating exchange rates.