A floating exchange rate:

A) is determined by the national governments involved.
B) remains extremely stable over long periods of time.
C) is determined by the actions of central banks.
D) is allowed to vary only within a narrow range.
E) adjusts in response to market forces.

Floating Exchange Rate

A currency system that allows the value of a currency to fluctuate according to the foreign exchange market.

Market Forces

The economic factors affecting the price and availability of goods and services, including supply and demand.

National Governments

The central governing authorities responsible for managing a nation's internal and external affairs, including implementing laws, policies, and regulations.