UPSC Exam > UPSC Questions > Under a managed floating exchange rate system...
Start Learning for Free
Under a managed floating exchange rate system, the nation’s monetary authorities intervene in foreign exchange markets to
- a)Smooth out short-run and long run fluctuations in exchange rates
- b)Keep exchange rates fixed among a group of nations
- c)Smooth out short-run fluctuations in exchange rates
- d)Keep exchange rates flexible
Correct answer is option 'C'. Can you explain this answer?
| FREE This question is part of | Download PDF Attempt this Test |
Most Upvoted Answer
Under a managed floating exchange rate system, the nation’s mone...
's central bank intervenes in the foreign exchange market to influence the value of its currency, but allows the exchange rate to float within a certain range. This means that the central bank may buy or sell its own currency in the foreign exchange market to maintain a desired exchange rate.
The managed floating exchange rate system is a compromise between a fixed exchange rate system, where the exchange rate is pegged to another currency or a basket of currencies, and a flexible exchange rate system, where the exchange rate is determined by market forces.
In a managed floating exchange rate system, the central bank may use a variety of tools to influence the exchange rate, such as changing interest rates, adjusting reserve requirements for banks, and buying or selling government securities. The goal is to balance the needs of maintaining a stable exchange rate with the benefits of allowing market forces to determine the value of the currency.
Overall, a managed floating exchange rate system provides some stability and predictability for businesses and investors, while still allowing for some flexibility and responsiveness to changing market conditions.
The managed floating exchange rate system is a compromise between a fixed exchange rate system, where the exchange rate is pegged to another currency or a basket of currencies, and a flexible exchange rate system, where the exchange rate is determined by market forces.
In a managed floating exchange rate system, the central bank may use a variety of tools to influence the exchange rate, such as changing interest rates, adjusting reserve requirements for banks, and buying or selling government securities. The goal is to balance the needs of maintaining a stable exchange rate with the benefits of allowing market forces to determine the value of the currency.
Overall, a managed floating exchange rate system provides some stability and predictability for businesses and investors, while still allowing for some flexibility and responsiveness to changing market conditions.
Free Test
FREE
| Start Free Test |
Community Answer
Under a managed floating exchange rate system, the nation’s mone...
A managed floating exchange rate system is a flexible exchange rate system in which the government or the country’s central bank may occasionally intervene in order to direct the country’s currency value into a certain direction. This is generally done in order to act as a buffer against economic shocks and hence soften its effect in the economy.
Attention UPSC Students!
To make sure you are not studying endlessly, EduRev has designed UPSC study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in UPSC.
|
Explore Courses for UPSC exam
|
|
Similar UPSC Doubts
Top Courses for UPSCView all
Under a managed floating exchange rate system, the nation’s monetary authorities intervene in foreign exchange markets toa)Smooth out short-run and long run fluctuations in exchange ratesb)Keep exchange rates fixed among a group of nationsc)Smooth out short-run fluctuations in exchange ratesd)Keep exchange rates flexibleCorrect answer is option 'C'. Can you explain this answer?
Question Description
Under a managed floating exchange rate system, the nation’s monetary authorities intervene in foreign exchange markets toa)Smooth out short-run and long run fluctuations in exchange ratesb)Keep exchange rates fixed among a group of nationsc)Smooth out short-run fluctuations in exchange ratesd)Keep exchange rates flexibleCorrect answer is option 'C'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Under a managed floating exchange rate system, the nation’s monetary authorities intervene in foreign exchange markets toa)Smooth out short-run and long run fluctuations in exchange ratesb)Keep exchange rates fixed among a group of nationsc)Smooth out short-run fluctuations in exchange ratesd)Keep exchange rates flexibleCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Under a managed floating exchange rate system, the nation’s monetary authorities intervene in foreign exchange markets toa)Smooth out short-run and long run fluctuations in exchange ratesb)Keep exchange rates fixed among a group of nationsc)Smooth out short-run fluctuations in exchange ratesd)Keep exchange rates flexibleCorrect answer is option 'C'. Can you explain this answer?.
Under a managed floating exchange rate system, the nation’s monetary authorities intervene in foreign exchange markets toa)Smooth out short-run and long run fluctuations in exchange ratesb)Keep exchange rates fixed among a group of nationsc)Smooth out short-run fluctuations in exchange ratesd)Keep exchange rates flexibleCorrect answer is option 'C'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Under a managed floating exchange rate system, the nation’s monetary authorities intervene in foreign exchange markets toa)Smooth out short-run and long run fluctuations in exchange ratesb)Keep exchange rates fixed among a group of nationsc)Smooth out short-run fluctuations in exchange ratesd)Keep exchange rates flexibleCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Under a managed floating exchange rate system, the nation’s monetary authorities intervene in foreign exchange markets toa)Smooth out short-run and long run fluctuations in exchange ratesb)Keep exchange rates fixed among a group of nationsc)Smooth out short-run fluctuations in exchange ratesd)Keep exchange rates flexibleCorrect answer is option 'C'. Can you explain this answer?.
Solutions for Under a managed floating exchange rate system, the nation’s monetary authorities intervene in foreign exchange markets toa)Smooth out short-run and long run fluctuations in exchange ratesb)Keep exchange rates fixed among a group of nationsc)Smooth out short-run fluctuations in exchange ratesd)Keep exchange rates flexibleCorrect answer is option 'C'. Can you explain this answer? in English & in Hindi are available as part of our courses for UPSC.
Download more important topics, notes, lectures and mock test series for UPSC Exam by signing up for free.
Here you can find the meaning of Under a managed floating exchange rate system, the nation’s monetary authorities intervene in foreign exchange markets toa)Smooth out short-run and long run fluctuations in exchange ratesb)Keep exchange rates fixed among a group of nationsc)Smooth out short-run fluctuations in exchange ratesd)Keep exchange rates flexibleCorrect answer is option 'C'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of
Under a managed floating exchange rate system, the nation’s monetary authorities intervene in foreign exchange markets toa)Smooth out short-run and long run fluctuations in exchange ratesb)Keep exchange rates fixed among a group of nationsc)Smooth out short-run fluctuations in exchange ratesd)Keep exchange rates flexibleCorrect answer is option 'C'. Can you explain this answer?, a detailed solution for Under a managed floating exchange rate system, the nation’s monetary authorities intervene in foreign exchange markets toa)Smooth out short-run and long run fluctuations in exchange ratesb)Keep exchange rates fixed among a group of nationsc)Smooth out short-run fluctuations in exchange ratesd)Keep exchange rates flexibleCorrect answer is option 'C'. Can you explain this answer? has been provided alongside types of Under a managed floating exchange rate system, the nation’s monetary authorities intervene in foreign exchange markets toa)Smooth out short-run and long run fluctuations in exchange ratesb)Keep exchange rates fixed among a group of nationsc)Smooth out short-run fluctuations in exchange ratesd)Keep exchange rates flexibleCorrect answer is option 'C'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice Under a managed floating exchange rate system, the nation’s monetary authorities intervene in foreign exchange markets toa)Smooth out short-run and long run fluctuations in exchange ratesb)Keep exchange rates fixed among a group of nationsc)Smooth out short-run fluctuations in exchange ratesd)Keep exchange rates flexibleCorrect answer is option 'C'. Can you explain this answer? tests, examples and also practice UPSC tests.
|
|
Explore Courses for UPSC exam
|
|
Suggested Free Tests
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
Follow Us
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup