Managed float system of exchange rates refers to a system in which currencies float against one another with:
A)the G8 intervening only to stabilize the currencies at set target exchange rates.
B)governments intervening only to stabilize their currencies at set target exchange rates.
C)big business houses intervening only to stabilize the currencies at set target exchange rates.
D)international financial institutions intervening only to stabilize the currencies at set target exchange rates.
E)the developed countries intervening only to stabilize the currencies at set target exchange rates.

Question

Quizplus · Accepted Answer

In a managed float system, governments or central banks intervene in the foreign exchange market to stabilize or influence the exchange rate of their currency, but they do not set a fixed exchange rate target. This allows for some fluctuation in the currency value based on market forces, while still enabling intervention to prevent excessive volatility or to reach economic policy goals.

Managed Float System of Exchange Rates Refers to a System