Question

A flexible exchange rate is one that​ _______.

A.operated in the world economy from the end of World War II to the early 1970s
B.is determined by a decision of the government or the central bank and is achieved by central bank intervention in the foreign exchange market to block the unregulated forces of demand and supply
C.follows a path determined by a decision of the government or the central bank and is achieved by central bank intervention in the foreign exchange market
D.is determined by demand and supply in the foreign exchange market with no direct intervention by the central bank

Answer 1

A flexible exchange rate is determined by market demand and supply without central bank intervention.

Step-by-step explanation:

A flexible exchange rate is one that is determined by demand and supply in the foreign exchange market with no direct intervention by the central bank. Countries that opt for a floating exchange rate policy allow the foreign exchange market to set their currency's value. This is distinct from other forms of exchange rate policies, such as a soft peg, where the government may intervene in the exchange rate market if there are significant fluctuations, or a hard peg, where the government sets a fixed exchange rate.