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Assertion (A): Manage floating exchange rate system is a hybrid system of exchange rate used by the most of the countries in recent time.
Reason (R): Excessive fluctuation in exchange rate system is checked by the central authority under dirty floating exchange rate.
Alternatives
  • a)
    Assertion (A) is true and Resason (R)is a correct reason of Assertion (A)
  • b)
    Assertion (A) is true and Resason (R)is not a correct reason of Assertion (A)
  • c)
    Assertion (A) is false, but Resason (R) is true
  • d)
    Both are false
Correct answer is option 'A'. Can you explain this answer?
Most Upvoted Answer
Assertion (A): Manage floating exchange rate system is a hybrid system...

Assertion (A) and Reason (R) Evaluation:

Assertion (A): Manage floating exchange rate system is a hybrid system of exchange rate used by most countries in recent times.
- This statement is true. Managed floating exchange rate system is a combination of fixed and floating exchange rate systems where the central bank intervenes to stabilize the currency's value.

Reason (R): Excessive fluctuation in exchange rate system is checked by the central authority under dirty floating exchange rate.
- This statement is a correct reason for Assertion (A). In a dirty floating exchange rate system, the central bank intervenes to prevent excessive fluctuations in the exchange rate by buying or selling currencies in the foreign exchange market.

Therefore, option 'a' is the correct answer as Assertion (A) is true and Reason (R) is a correct explanation for Assertion (A).
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Community Answer
Assertion (A): Manage floating exchange rate system is a hybrid system...
Under managed floating exchange rate, price is determined by the market forces however, excessive fluctuation is checked by the central bank. Thus, this system has components of both fixed and floating exchange rate system and known as dirty floating exchange rate.
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Assertion (A): Manage floating exchange rate system is a hybrid system of exchange rate used by the most of the countries in recent time.Reason (R): Excessive fluctuation in exchange rate system is checked by the central authority under dirty floating exchange rate.Alternativesa)Assertion (A) is true and Resason (R)is a correct reason of Assertion (A)b)Assertion (A) is true and Resason (R)is not a correct reason of Assertion (A)c)Assertion (A) is false, but Resason (R) is trued)Both are falseCorrect answer is option 'A'. Can you explain this answer?
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