Question : It refers to a system in which exchange rate is determined by forces of demand and supply of different currencies in the foreign exchange market.
Option 1: Fixed exchange rate system
Option 2: Flexible exchange rate system
Option 3: Managed floating rate system
Option 4: None of the above.
Correct Answer: Flexible exchange rate system
Solution : Flexible exchange rate system refers to a system in which exchange rate is determined by forces of demand and supply of different currencies in the foreign exchange market. Hence Option B is correct.
Question : It refers to a system in which foreign exchange rate is determined by market forces in central bank influence the exchange rate.
Question : It refers to a system in which exchange rate of a currency is fixed by the government.
Question : Depreciation and appreciation are the part of which exchange rate system?
Question : Revaluation and devaluation are the part of which exchange rate system?
Question : Identify which of the following statements is true?
Option 1: The flexible exchange rate system gives the government more flexibility to maintain large stocks of foreign exchange reserves
Option 2: In the Managed floating exchange rate system, the government intervenes to buy and sell foreign currencies.
Option 3: In the Managed floating exchange system, the central bank intervenes to moderate exchange rate fluctuations
Option 4: In the Fixed exchange rate system, market forces fix the exchange rate.
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