Question

Under the ________ Exchange Rate System, the Central Bank can control the rise/fall of foreign exchange rate in a range-bound manner. (Fill up the blank with the correct alternative.)

• A. fixed
• B. flexible
• C. managed floating
• D. gold standard

Hint:

Managed floating is a hybrid system combining market-driven exchange rates with occasional Central Bank intervention.

Answer 1

The Correct Option is C

Under the managed floating exchange rate system, the exchange rate is primarily market-driven, but the Central Bank intervenes to stabilize it within a specified range.