Which of the following is characteristic of the fixed exchange rate system?
A)utilized by most advanced economies
B)rates based on supply and demand forces
C)value of currency is set relative to the value of another
D)allows for monetary policy flexibility

Question

Quizplus · Accepted Answer

A fixed exchange rate system sets the value of a currency relative to the value of another currency or a basket of currencies. Supply and demand forces do not play a role in determining the exchange rate under this system. Advanced economies may or may not use fixed exchange rates, and a fixed exchange rate system typically does not allow for much monetary policy flexibility.

Which of the Following Is Characteristic of the Fixed Exchange