Question

When the exchange rates are allowed to be determined by supply and demand, they are called which of the following?

a. flexible
c. direct
b. fixed
d. indirect

Answer 1

I believe the answer is: A. Flexible

Flexible exchange rate refers to a type of exchange rate which influenced by the power of currency after considering its performance in the market.

In flexible exchange rate, the strength of a currency would increase if the country export more products to foreign market compared to the amount that the country imported.

Answer 2

The correct answer is letter A. Flexible. When the exchange rates are allowed to be determined by supply and demand, they are called flexible. The flexibility depends on the exchange rates made by the supply and the demand.