Question

Under the ............ Exchange Rate System, the Central Bank can control the foreign exchange rate in a range bound manner.

• A. Fixed
• B. Flexible
• C. Managed floating
• D. Gold standard

Hint:

The managed floating exchange rate system gives flexibility in the currency market while allowing for central bank intervention to maintain stability.

Answer 1

The Correct Option is C

Under a managed floating exchange rate system, the central bank allows the exchange rate to fluctuate but intervenes in the market to prevent excessive volatility and ensure stability. This system is often used by countries with floating exchange rates but with some degree of government control.