Central banks intervene to buy and sell foreign currencies in an attempt to moderate exchange rate movements whenever they feel that such actions are appropriate. What is this move called?

Managed floating.

The correct answer is Option (1) → Managed floating.

Managed floating exchange rate system (also known as dirty float) is a system where the exchange rate is primarily determined by market forces, but the central bank intervenes from time to time by buying or selling foreign currencies to stabilize excessive fluctuations in the exchange rate.

In this system:

• The exchange rate is not fixed, but it's not left entirely to the market either.

• Central bank intervention occurs when necessary, based on economic conditions.