A-LevelEconomicsInternational economic issues9708/12 · Feb/Mar 2021 · Q211 Mark

A country replaces a floating exchange rate system with a managed floating exchange rate system. Which statement is correct?

AIts central bank would have to intervene more frequently in the foreign exchange market.

BIts central bank would need to hold fewer foreign currency reserves.

CThe value of its currency would be determined by its major trading partners.

DThe value of its currency would be determined by the value of the US dollar.

✓ Correct answer

A: Its central bank would have to intervene more frequently in the foreign exchange market.

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Topic: International economic issues, A-Level Economics (syllabus 9708). Multiple choice, 1 mark.
Source: A-Level Economics, Feb/Mar 2021 Paper 1 Variant 2, question 21.

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