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    Question

    The exchange rate system where the value of a currency

    is determined by market forces is called a:
    A Fixed exchange rate Correct Answer Incorrect Answer
    B Floating exchange rate Correct Answer Incorrect Answer
    C Pegged exchange rate Correct Answer Incorrect Answer
    D Managed exchange rate Correct Answer Incorrect Answer

    Solution

    In a floating (or flexible) exchange rate system, the currency's value is allowed to fluctuate in response to foreign exchange market mechanisms without direct government or central bank intervention.

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