A flexible exchange rate is an exchange rate whose value:
A) is determined by the law of one price.
B) varies according to the supply and demand for the currency in the foreign exchange market.
C) is set by official government policy.
D) reflects the comparative advantage of the home country versus foreign countries.

Question

Quizplus · Accepted Answer

A flexible exchange rate, also known as a floating exchange rate, varies according to the supply and demand for the currency in the foreign exchange market. This means its value can change from moment to moment.

A Flexible Exchange Rate Is an Exchange Rate Whose Value