One advantage of a managed float exchange rate system compared to a floating exchange rate system is
A) it allows the exchange rate to reflect demand and supply in the market.
B) there is no need for government intervention.
C) it allows greater exchange rate stability.
D) it eliminates the possibility of depreciation during a recession.

Question

Quizplus · Accepted Answer

A managed float system allows for some government intervention to maintain stability in the exchange rate. This can help to prevent sudden and drastic fluctuations in the exchange rate, which can be beneficial for businesses engaging in international trade.

One Advantage of a Managed Float Exchange Rate System Compared