Under a floating exchange rate, the government or central bank ties the official exchange rate to another country's currency or to the price of gold.
举一反三
- Under a floating exchange regime, the government and central bank never intervenes in the currency market.
- The price of one country's currency in units of another currency or commodity is the ________. A: foreign interest rate B: foreign currency exchange rate C: par value D: international rate
- Which of the following is NOT part of a country's "economic fundamentals"? A: the amount of speculation conducted with a nation's currency B: policies pursued by the nation's government C: the national currency's exchange rate D: policies pursued by the nation's central bank
- The difference between a free floating exchange rate and a managed floating exchange rate is A: under managed float government intervention plays a role in determining the exchange rate. B: free floating exchange rates can only appreciate or depreciate by 5 units per day. C: the equilibrium exchange rate is always higher for managed float rates. D: all of the above
- Under which of the following policies does the government enter the foreign exchange market and buy or sell foreign currency in order to influence the exchange rate of the domestic currency? A: Exchange controls B: Capital controls C: Official intervention D: Adjustable peg