Which exchange rates fluctuate depending on the demand and supply of currencies in foreign exchange markets, in principle without interference by governments?

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Floating

Fixed

Pegged

None of the above

answer is A.

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Detailed Solution

Floating exchange rates fluctuate depending on the demand and supply of currencies in the foreign exchange market. In other words, the exchange rate is the worth of another country's currency to our own. Travellers will mostly find this beneficial. Flexible or floating exchange rates shift according to the supply and demand of different currencies on foreign exchange markets, often free from government interference. Today, flexible exchange rates are the policy that is used in the majority of nations. The several currencies that fall under this category are the yen, dollar, euro, and British pound.

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