A 'Floating Exchange Rate System' Is One in Which

Multiple Choice

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

A) the central bank does not intervene to adjust the exchange rate.
B) shortages of foreign exchange will result in an appreciation of the domestic currency.
C) foreign exchange traders accept only a fixed price for their goods, regardless of the demand and supply for the currency.
D) 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.