Floating exchange rates are determined by what?
A) market forces
B) the IMF
C) the World Bank
D) an international commission on exchange rate parity
E) national banks

Question

Quizplus · Accepted Answer

Floating exchange rates are determined by market forces of supply and demand in the foreign exchange market. The exchange rate is not fixed and can vary based on changing economic conditions, such as inflation or changes in interest rates, as well as political factors and other events that affect international trade and investment. The IMF and World Bank may play a role in advising and influencing exchange rates, but they do not have direct control over them. Similarly, national banks may intervene in the foreign exchange market to influence exchange rates, but ultimately it is the market that determines the rate.

Floating Exchange Rates Are Determined by What