Under managed floating exchange rate system, central bank determines the exchange rate and excessive fluctuation is checked by the market forces.a)Trueb)Falsec)Partially trued)Incomplete statementCorrect answer is option 'B'. Can you explain this answer?

Question

Answer

False

Explanation:

Under a managed floating exchange rate system, the central bank intervenes in the foreign exchange market to influence the exchange rate but does not fix it entirely. The exchange rate is allowed to fluctuate within a certain range determined by the central bank.

While market forces do play a role in determining the exchange rate, the central bank's interventions can limit the extent of fluctuations. Therefore, excessive fluctuation may not necessarily be checked by market forces alone.

Hence, the statement that 'under managed floating exchange rate system, central bank determines the exchange rate and excessive fluctuation is checked by the market forces' is not entirely true and the correct answer is option B, false.

Answer

Under managed floating exchange rate system, market forces determine the exchange rate and excessive fluctuation is checked by the central bank.

Similar Class 12 Doubts

The fixed exchange rate is determined by the Reserve Bank of India.

Flexible exchange rate is determined by the supply and demand of foreign exchange in the international market.

Demand for foreign exchange is directly related to the price of foreign exchange.

Rahul dies without a legal heir. His property stands transferred to the government. The income under this head will be referred to as ‘Special assessment’.

Economic stability and equitable distribution of income and wealth can be achieved by the budgetary policy of the government.

Top Courses for Class 12

Suggested Free Tests

Related Content

Schools

Competitive Examinations

Quick Access Links

Technical Exams