The exchange rate system in which a country allows the value

The exchange rate system in which a country allows the value of the currency to be determined by the market forces of supply and demand is known as a Select one: a. floating exchange rate b. target zone c. currency board d. pegged exchange rate

Solution

The exchange rate system in which it is determined by demand and supply of currency is known as floating exchange rate system or flexible exchange rate system.

Hence it can be said that the exchange rate system in which a country allows the value of currency to be determined by the market forces of demand and supply is known as floating exchange rate system.

Hence option a is the correct answer.