Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
government intervention
B
inflation control
C
trade balance
D
currency appreciation
Understanding the Answer
Let's break down why this is correct
Answer
Flexible exchange rates are determined by market forces, meaning that the value of a currency goes up or down based on supply and demand. In contrast, fixed exchange rates are set by a government or central bank and do not change with market fluctuations. This means that the value of a currency is kept stable against another currency, like how the U. S. dollar might be fixed to the value of the euro.
Detailed Explanation
Fixed exchange rates are controlled by the government. Other options are incorrect because Some might think fixed rates help control inflation; People may believe fixed rates directly fix trade balance.
Key Concepts
Flexible Exchange Rates
Fixed Exchange Rates
International Trade Dynamics
Topic
Flexible Exchange Rates
Difficulty
medium level question
Cognitive Level
understand
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