ECONOMICS
FOREIGN CURRENCY MARKETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Treu
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False
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Either A or B
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None of the above
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Detailed explanation-1: -Australia has had a floating exchange rate regime since 1983. This is a common type of exchange rate regime as it contributes to macroeconomic stability by cushioning economies from shocks and allowing monetary policy to be focussed on targeting domestic economic conditions.
Detailed explanation-2: -Australia has a floating exchange rate. An exchange rate is the price of one currency compared to another. A floating rate is determined by the market and fluctuates constantly.
Detailed explanation-3: -A dirty float is a floating exchange rate where a country’s central bank occasionally intervenes to change the direction or the pace of change of a country’s currency value.
Detailed explanation-4: -In a floating regime, the central bank may also intervene when it is necessary to ensure stability and avoid inflation; however, it is less often that the central bank of a floating regime will interfere.