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how are flexible exchange rates​ determined? part 2 a. the exchange rate is determined where the current account is equal to the capital account. b. the exchange rate is determined where the quantity of exports demanded is equal to the quantity supplied of exports. c. the exchange rate is determined where the quantity of exports demanded is equal to the quantity supplied of imports. d. the exchange rate is determined where the quantity of a currency demanded is equal to the quantity supplied of the currency.

Respuesta :

Exchange rates in a flexible exchange rate are generally determined by market forces of supply and demand for foreign exchange.

What factors influence the value of a flexible exchange rate?

Governments and central banks do not participate in the foreign exchange market in a free-floating exchange rate system. The interaction between governments and central banks and currency markets is similar to the traditional relationship between these organisations and stock markets. Governments may control stock markets in order to avoid fraud, but stock prices are left to float in the market. For example, the United States government does not meddle in the stock market to influence stock prices. A self-regulating system is one of the benefits of a free-floating system. If the currency rate is left to the market, there is no need for government involvement.

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