Q19
Which among the following statement is INCORRECT?
A.
Floating exchange rate system works on the market mechanism
B.
Floating exchange rate breeds uncertainties and speculation
C.
Economic and political factors and value judgement influence the choice of the exchange rate system
D.
The system of floating exchange rate requires comprehensive government intervention
AnswerAnswer: Option D
Solution
Answer: Option D
Solution:
A floating exchange rate is one that is determined by supply and demand on the open market. A floating exchange rate doesn't mean countries don't try to intervene and manipulate their currency's price, since governments and central banks regularly attempt to keep their currency price favorable for international trade.