Question : Match List-I with List-II
|
List-I |
List-II |
||
|
(A) |
Pegged exchange rate system |
(I) |
Setting up of IMF and World Bank |
|
(B) |
Managed floating |
(II) |
Fixed exchange rate system |
|
(C) |
Bretton Woods Conference |
(III) |
Dirty floating |
|
(D) |
The third element in BOP |
(IV) |
Error and Omission Account |
Option 1: (A) - (II), (B) - (I), (C) - (III), (D) - (IV)
Option 2: (A) - (II), (B) - (III), (C) - (I), (D) - (IV).
Option 3: (A) - (I), (B) - (II), (C) - (IV), (D) - (III)
Option 4: (A) - (III), (B) - (IV), (C) - (E), (D) - (II)
Correct Answer: (A) - (II), (B) - (III), (C) - (I), (D) - (IV).
Solution : A flexible exchange rate system is one in which the market's supply and demand for money determine the exchange rate. The value of the currency is free to alter in response to shifts in the supply and demand for foreign currencies under a flexible exchange rate system. Under a flexible exchange rate when the price of domestic currency in terms of foreign currency increases it is called appreciation of domestic currency.
