A 'Fixed Exchange Rate System' Is One in Which

Multiple Choice

A 'fixed exchange rate system' is one in which:

A) the currency is backed by a fixed amount of gold.
B) the government defines its currency to be worth a certain amount in terms of another currency and ensures that the rate remains at that level.
C) foreign exchange traders accept only a fixed price for their goods, regardless of the demand and supply for the currency.
D) demand and supply adjust so that there are no shortages or surpluses of currency in the market.