In a managed float exchange-rate system
A) governments commit themselves to maintaining a specific fixed price against other currencies
B) governments allow their currencies to float freely.
C) governments intervene in the foreign exchange market to influence the value of their currency.
D) currency speculation is prohibited.
E) governments only change the value of their currency very rarely.

Question

Quizplus · Accepted Answer

In a managed float exchange-rate system, governments intervene in the foreign exchange market to influence the value of their currency. While they do not fix or peg their currency to a specific value, they also do not allow it to float freely without any intervention. This allows governments to manage and stabilize their currency's value in response to market pressures.

In a Managed Float Exchange-Rate System