When the value of one country's currency relative to that of another varies with market conditions,which of the following exists?
A) Floating exchange rate
B) Fixed exchange rate
C) Indexed exchange rate
D) Flat exchange rate
E) Balanced exchange rate

Question

Quizplus · Accepted Answer

A floating exchange rate exists when the value of a country's currency fluctuates in response to market forces, such as supply and demand. This is the opposite of a fixed exchange rate, which is set and maintained by governments or central banks. Indexed and flat exchange rates are not commonly used terms in the foreign exchange market, and there is no such thing as a balanced exchange rate.

When the Value of One Country's Currency Relative to That