Answer:
The correct option is D) supply and demand
Step-by-step explanation:
In the foreign exchange market, there may be different types of exchange rate systems. A monetary system which depends on supply and demand is known to be a flexible exchange rate system. In contrast, a fixed exchange rate is a type of exchange system in which the rate is fixed by the government and monetary authority. In a flexible exchange rate system, every currency area is free to decide its exchange rate.