Question

Which of the following are reasons managed floating exchange rates were adopted by the industrialized nations in 1973?

Check all that apply.
A) To avoid delays in adjustments of exchange rates caused by procedural difficulties and political biases
B) To enable dirty floats in order to offset free market forces of supply and demand
C) To enable more prompt and continuous adjustments of exchange rates in response to evolving market forces
D) To enable nations to initiate fluctuations in exchange rates

Answer 1

A) To avoid delays in adjustments of exchange rates caused by procedural difficulties and political biases.

C) To enable more prompt and continuous adjustments of exchange rates in response to evolving market forces.

Step-by-step explanation:

• A managed floating exchange rate system allows the exchange rate to be allowed by a free market force of the supply and demand that consists of the some degrees of the government inventions.

• It was adopted in 1973 due to the overtime the float led to the market disordering and that caused a dramatic exchange rate fluctuations. Hence in order to control this, a system had to be made to keep at check on the change in rates.