Question

Fill in the blanks with appropriate option.

A country is said to have a ____________ exchange rate when the government keeps the exchange rate against other currencies at or near a particular target, while a country is said to have a ____________ exchange rate when the rate is allowed to move with the market.
Optons:
a. fixed
b. floating
c. flat
d. stable
e. static
f. flexible
g. free market
h. variable

Answer 1

FIXED , FLOATING

Step-by-step explanation:

In simple words, A fixed currency rate refers to the regime imposed by a governments or banking system which links the rate of exchanging of the national currency with the currency of another nation or the price of gold. A set exchanged rate mechanism has the aim of keeping the currency's worth throughout a narrow range.

Whereas, floating exchange rate relates to the system where a country's exchange value is determined by an bid- and demand-based forex market compared to foreign currency. That is in comparison to a defined exchange value, where the law sets the rate completely or mainly.