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Managed floating exchange rate is a system in which the
- a)the central bank allow the exchange rate to determined by market forces
- b)the central bank or Government allow the exchange rate to determined by market forces
- c)the Government allow the exchange rate to determined by market forces
- d)None of the above
Correct answer is option 'B'. Can you explain this answer?
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Managed floating exchange rate is a system in which thea)the central b...
Managed Floating Exchange Rate System
The managed floating exchange rate system is a monetary system in which the central bank or government allows the exchange rate to be determined by market forces but intervenes in the foreign exchange market to influence the exchange rate when necessary. It is a hybrid of fixed and floating exchange rate systems.
Features of Managed Floating Exchange Rate System
- Central bank or government intervention: In a managed floating exchange rate system, the central bank or government intervenes in the foreign exchange market to influence the exchange rate when necessary. This intervention can be in the form of buying or selling foreign currency to increase or decrease the value of the domestic currency.
- Market forces determine the exchange rate: In a managed floating exchange rate system, the exchange rate is primarily determined by market forces such as supply and demand for foreign currency.
- Flexibility: The managed floating exchange rate system allows for greater flexibility than a fixed exchange rate system. The exchange rate can adjust to changes in market conditions, which can help to maintain stability in the economy.
- Stability: The managed floating exchange rate system can provide greater stability than a pure floating exchange rate system as the central bank or government can intervene to prevent sharp fluctuations in the exchange rate.
Advantages of Managed Floating Exchange Rate System
- Greater flexibility: The managed floating exchange rate system allows for greater flexibility than a fixed exchange rate system as the exchange rate can adjust to changes in market conditions.
- Stability: The managed floating exchange rate system can provide greater stability than a pure floating exchange rate system as the central bank or government can intervene to prevent sharp fluctuations in the exchange rate.
- Market-oriented: The managed floating exchange rate system is more market-oriented than a fixed exchange rate system as it allows market forces to determine the exchange rate.
Disadvantages of Managed Floating Exchange Rate System
- Uncertainty: The managed floating exchange rate system can create uncertainty for businesses and investors as the exchange rate can be subject to intervention by the central bank or government.
- Political interference: The managed floating exchange rate system can be subject to political interference as the central bank or government may intervene in the foreign exchange market for political reasons.
Conclusion
In conclusion, the managed floating exchange rate system is a monetary system in which the central bank or government allows the exchange rate to be determined by market forces but intervenes in the foreign exchange market to influence the exchange rate when necessary. It provides greater flexibility and stability than a fixed exchange rate system and is more market-oriented. However, it can create uncertainty for businesses and investors and be subject to political interference.
The managed floating exchange rate system is a monetary system in which the central bank or government allows the exchange rate to be determined by market forces but intervenes in the foreign exchange market to influence the exchange rate when necessary. It is a hybrid of fixed and floating exchange rate systems.
Features of Managed Floating Exchange Rate System
- Central bank or government intervention: In a managed floating exchange rate system, the central bank or government intervenes in the foreign exchange market to influence the exchange rate when necessary. This intervention can be in the form of buying or selling foreign currency to increase or decrease the value of the domestic currency.
- Market forces determine the exchange rate: In a managed floating exchange rate system, the exchange rate is primarily determined by market forces such as supply and demand for foreign currency.
- Flexibility: The managed floating exchange rate system allows for greater flexibility than a fixed exchange rate system. The exchange rate can adjust to changes in market conditions, which can help to maintain stability in the economy.
- Stability: The managed floating exchange rate system can provide greater stability than a pure floating exchange rate system as the central bank or government can intervene to prevent sharp fluctuations in the exchange rate.
Advantages of Managed Floating Exchange Rate System
- Greater flexibility: The managed floating exchange rate system allows for greater flexibility than a fixed exchange rate system as the exchange rate can adjust to changes in market conditions.
- Stability: The managed floating exchange rate system can provide greater stability than a pure floating exchange rate system as the central bank or government can intervene to prevent sharp fluctuations in the exchange rate.
- Market-oriented: The managed floating exchange rate system is more market-oriented than a fixed exchange rate system as it allows market forces to determine the exchange rate.
Disadvantages of Managed Floating Exchange Rate System
- Uncertainty: The managed floating exchange rate system can create uncertainty for businesses and investors as the exchange rate can be subject to intervention by the central bank or government.
- Political interference: The managed floating exchange rate system can be subject to political interference as the central bank or government may intervene in the foreign exchange market for political reasons.
Conclusion
In conclusion, the managed floating exchange rate system is a monetary system in which the central bank or government allows the exchange rate to be determined by market forces but intervenes in the foreign exchange market to influence the exchange rate when necessary. It provides greater flexibility and stability than a fixed exchange rate system and is more market-oriented. However, it can create uncertainty for businesses and investors and be subject to political interference.
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Community Answer
Managed floating exchange rate is a system in which thea)the central b...
Yes it is correct as managed floating refers to the manupulation done by the rbi with the help of forces of supply and demand
At the time
1 when the when rate of exchange will increase or currency depreciated (from 60-70)the rbi (central bank ) will purchase the indian currency from IMM (international money market) as the supply of currency decreases its demand tends to increase and the rate of exchange will come to the point of equillibrium
And vive versa
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Managed floating exchange rate is a system in which thea)the central bank allow the exchange rate to determined by market forcesb)the central bank or Government allow the exchange rate to determined by market forcesc)the Government allow the exchange rate to determined by market forcesd)None of the aboveCorrect answer is option 'B'. Can you explain this answer?
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Managed floating exchange rate is a system in which thea)the central bank allow the exchange rate to determined by market forcesb)the central bank or Government allow the exchange rate to determined by market forcesc)the Government allow the exchange rate to determined by market forcesd)None of the aboveCorrect answer is option 'B'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Managed floating exchange rate is a system in which thea)the central bank allow the exchange rate to determined by market forcesb)the central bank or Government allow the exchange rate to determined by market forcesc)the Government allow the exchange rate to determined by market forcesd)None of the aboveCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Managed floating exchange rate is a system in which thea)the central bank allow the exchange rate to determined by market forcesb)the central bank or Government allow the exchange rate to determined by market forcesc)the Government allow the exchange rate to determined by market forcesd)None of the aboveCorrect answer is option 'B'. Can you explain this answer?.
Managed floating exchange rate is a system in which thea)the central bank allow the exchange rate to determined by market forcesb)the central bank or Government allow the exchange rate to determined by market forcesc)the Government allow the exchange rate to determined by market forcesd)None of the aboveCorrect answer is option 'B'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Managed floating exchange rate is a system in which thea)the central bank allow the exchange rate to determined by market forcesb)the central bank or Government allow the exchange rate to determined by market forcesc)the Government allow the exchange rate to determined by market forcesd)None of the aboveCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Managed floating exchange rate is a system in which thea)the central bank allow the exchange rate to determined by market forcesb)the central bank or Government allow the exchange rate to determined by market forcesc)the Government allow the exchange rate to determined by market forcesd)None of the aboveCorrect answer is option 'B'. Can you explain this answer?.
Solutions for Managed floating exchange rate is a system in which thea)the central bank allow the exchange rate to determined by market forcesb)the central bank or Government allow the exchange rate to determined by market forcesc)the Government allow the exchange rate to determined by market forcesd)None of the aboveCorrect answer is option 'B'. Can you explain this answer? in English & in Hindi are available as part of our courses for Commerce.
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Managed floating exchange rate is a system in which thea)the central bank allow the exchange rate to determined by market forcesb)the central bank or Government allow the exchange rate to determined by market forcesc)the Government allow the exchange rate to determined by market forcesd)None of the aboveCorrect answer is option 'B'. Can you explain this answer?, a detailed solution for Managed floating exchange rate is a system in which thea)the central bank allow the exchange rate to determined by market forcesb)the central bank or Government allow the exchange rate to determined by market forcesc)the Government allow the exchange rate to determined by market forcesd)None of the aboveCorrect answer is option 'B'. Can you explain this answer? has been provided alongside types of Managed floating exchange rate is a system in which thea)the central bank allow the exchange rate to determined by market forcesb)the central bank or Government allow the exchange rate to determined by market forcesc)the Government allow the exchange rate to determined by market forcesd)None of the aboveCorrect answer is option 'B'. Can you explain this answer? theory, EduRev gives you an
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