Economic Awareness - Sectors of Indian Economy
Which of the following is TRUE about a managed float exchange rate system?
Which of the following is TRUE about a managed float exchange rate system?
medium Q5 of 15
Step-by-Step Solution
Step 1: Understand managed float system
Managed float allows currency to float but with occasional central bank intervention to stabilize or influence value.Step 2: Analyze options
Currency value is fixed and does not change. describes fixed exchange rate, Currency value is determined solely by market forces with no intervention. describes pure floating, Domestic currency is fully backed by foreign reserves. describes currency board system. Only Central bank intervenes occasionally to stabilize the currency value. correctly describes managed float.Final Answer:
Central bank intervenes occasionally to stabilize the currency value. → Option BQuick Check:
Managed float = occasional central bank intervention ✅
Quick Trick: Managed float = market forces plus occasional intervention.
Common Mistakes:
MISTAKES- Mistaking managed float for fixed or pure floating systems.
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