Final answer:
The two main types of exchange-rate systems are the fixed (pegged) exchange rate and the floating (flexible) exchange rate, with fixed rates involving government intervention to maintain a target value and floating rates determined by the foreign exchange market.
Step-by-step explanation:
The two main types of exchange-rate systems are the fixed (pegged) exchange rate and the floating (flexible) exchange rate. A fixed exchange rate, also known as a pegged exchange rate, involves the government intervening to keep the currency's value against another currency at a targeted level. The floating exchange rate is where the foreign exchange market determines the value of the currency without direct government intervention, and it can change with inflation and rates of return. These systems are on a spectrum that includes also mixed approaches like a soft peg, which allows for some fluctuation within a range, or a merged currency where a nation adopts a common currency with other countries, eliminating foreign exchange risk.