Economics · Exchange Rate System
Which of the following is NOT true regarding a managed floating exchange rate system?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The exchange rate is largely determined by the market.
- 2In case of excessive volatility, the central bank can intervene.
- 3The exchange rate policy is guided by the need to reduce unprecedented volatility.
- 4Speculative activities are encouraged by the central bank as part of the policy.✓
Correct answer
Speculative activities are encouraged by the central bank as part of the policy.
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