What is called a country's decision to allow its currency value to change freely?
Correct answer: B. Floating exchange rate
- A. Pegged exchange rate
- B. Floating exchange rate
- C. Liberal exchanged rate
- D. Open exchange rate
Explanation
Under a floating exchange rate, the currency’s value is determined mainly by market demand and supply rather than being fixed by the government. A pegged rate, by contrast, is tied to another currency or a specified value.
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