[Solved] Which of the following statements about the 'managed float' exchange rate system is correct? — Ans: Exchange rates float but the central bank intervenes occasionally to stabilize... | Economic Awareness

Economic Awareness - Sectors of Indian Economy

Which of the following statements about the 'managed float' exchange rate system is correct?

AExchange rates float but the central bank intervenes occasionally to stabilize them

BExchange rates float freely without any government intervention

CExchange rates are completely fixed by the government

DExchange rates are pegged permanently to the US dollar

Step-by-Step Solution

Step 1: Define managed float system
Managed float means exchange rates fluctuate based on market forces but central banks intervene occasionally to reduce volatility.
Step 2: Evaluate options
Completely fixed rates and permanent pegging are not managed float; free float excludes intervention.
Final Answer:
Exchange rates float but the central bank intervenes occasionally to stabilize them → Option A
Quick Check:
Managed float = market-driven with occasional intervention ✅

Quick Trick: Managed float = float + occasional central bank action.

Common Mistakes:

MISTAKES

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