ECONOMICS
FOREIGN CURRENCY MARKETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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What is the difference between a fixed rate exchange system and a floating rate system?
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Government sets rate vs market sets rate
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Doesn’t exist vs does exist
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Never changing vs always changing
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Currency never appreciates vs can appreciate
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Explanation:
Detailed explanation-1: -Meaning Fixed exchange rate refers to a rate which the government sets and maintains at the same level. Flexible exchange rate is a rate that variate according to the market forces. Self-adjusting mechanism Operates through variation in supply of money, domestic interest rate and price.
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