Question

Match each type of exchange rate system to the way the exchange rate is determined. Exchange rate determined by demand and supply of foreign currency- Exchange rate pegged to the value of another nation’s currency- Exchange rate determined by both government intervention and supply and demand - Managed - Floating - Fixed.

Answer 1

In a floating exchange rate system, the exchange rate is determined by supply and demand. In a pegged exchange rate system, the rate is fixed based on another currency. In a managed exchange rate system, the rate is determined by both government intervention and market forces.

Step-by-step explanation:

In a floating exchange rate system, the exchange rate is determined by the demand and supply of foreign currency in the foreign exchange market. The value of the currency fluctuates based on market forces. In a pegged exchange rate system, the exchange rate is fixed and pegged to the value of another nation's currency. The government intervenes to ensure that the exchange rate remains at the pegged value. In a managed exchange rate system, the exchange rate is determined by both government intervention and supply and demand in the market. The government actively manages the exchange rate through interventions like buying or selling currencies.