A floating exchange rate is

Question

BlackTom AI · Accepted Answer

A floating exchange rate is determined by supply and demand in the foreign‑exchange market, so option c is correct.

1) Relevant knowledge points and concepts
- Exchange rate: the price of one currency in terms of another.
- Floating (flexible) exchange rate: market forces (currency supply and demand from trade, capital flows, interest rate differentials, speculation) set the rate; the government/central bank does not peg or fix it.
- Fixed (pegged) exchange rate: government/central bank intervenes to keep the exchange rate at a target level.
- Managed float: intermediate case where authorities intervene occasionally.

2) Step‑by‑step reasoning
- Identify the defining feature of a floating rate: absence of a fixed official rate and primary determination by supply and demand.
- Compare each option to that definition:
  - Option c explicitly states the rate changes according to supply and demand without government intervention — this matches the floating definition.
  - Options a, b, and d describe different concepts (see below).

3) Calculations / intermediate steps
- No numeric calculation is needed; reasoning is conceptual. The logical “steps” are: define floating → match definition to choices → eliminate mismatches → select c.

4) Why the correct answer is correct
- Option c captures both essential elements: (a) the exchange rate changes and (b) the changes reflect market supply and demand rather than being set or fixed by authorities. That is the textbook definition of a floating exchange rate.

5) Why the other options are incorrect
- a. Describes an inflation‑adjusted economic growth rate (e.g., real GDP growth), not an exchange rate.
- b. Describes an interest rate set by a central bank (policy rate), not a currency exchange rate.
- d. Describes a fixed (pegged) exchange rate, the opposite of a floating system.

6) Conclusion
- Therefore the correct choice is c, which matches the provided answer: "a currency exchange rate that changes according to supply and demand, without government intervention in the currency market."

A floating exchange rate is单项选择题

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