Final answer:
Exchange rates in freely floating currencies can fluctuate quite large when economic factors such as inflation or international financial flows are present.
Step-by-step explanation:
Fluctuations in exchange rates are more likely to occur when countries allow their currencies to freely float against one another. This means that the value of a currency can increase or decrease in relation to other currencies based on various economic factors. For example, if a country experiences high inflation or has strong productivity growth compared to other economies, its currency is likely to appreciate, whereas if it experiences outflows of international financial capital or has relatively high inflation, its currency may depreciate. These fluctuations can sometimes be quite large and can impact international trade and finance.