GK
ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Which exchange rate mechanism calls for frequent redefining of the par value by small amounts to remove a payments disequilibrium?
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dual exchange rates
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crawling pegged exchange rates
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managed floating exchange rates
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adjustable pegged exchange rates
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Explanation:
Detailed explanation-1: -A currency peg is a policy in which a national government or central bank sets a fixed exchange rate for its currency with a foreign currency or a basket of currencies and stabilizes the exchange rate between countries. The currency exchange rate is the value of a currency compared to another.
Detailed explanation-2: -A floating exchange rate is determined by the private market through supply and demand. A fixed, or pegged, rate is a rate the government (central bank) sets and maintains as the official exchange rate. The reasons to peg a currency are linked to stability.
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