Asked by Luqman Waheeduddin on May 01, 2024
Verified
Define the two "pure" types of exchange-rate systems.
Exchange-Rate Systems
The rules and conventions that govern how the value of a country's currency is determined in relation to other currencies.
- Differentiate between fixed (or pegged) and flexible exchange rate policies.
Verified Answer
JK
Jairaj KhuranaMay 02, 2024
Final Answer :
The flexible exchange rate (or floating exchange rate)is a rate of exchange that is determined by the international demand for and supply of a nation's money and that is consequently free to rise or fall because it is not subject to currency interventions. The fixed exchange rate is a rate of exchange that is set in some way and therefore prevented from rising or falling with changes in currency supply and demand.
Learning Objectives
- Differentiate between fixed (or pegged) and flexible exchange rate policies.
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