Question

The exchange rate determined by the market forces of demand and supply of foreign exchange is: *

1 point

(b) Flexible exchange rate

(a) Fixed exchange rate

(d) None

(c) Managed floating exchange rate​

Answer 1

Answer:

Whereas the rate of exchange which is determined by the market forces of demand and supply of foreign currencies in the foreign exchange market, is termed as flexible exchange rate. 27. Give meanings of fixed, flexible and managed floating exchange rates.

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Answer 2

We are asked the question how is the exchange rate determined by the forces of the market regarding the supply and demand of foreign exchange. There are four options given and the most appropriate answer is (c).

• The correct option here for the question asked is option C.
• The currency exchange rate is determined by the forces playing in the market of demand and supply.
• Along with this the Reserve Bank of India also manages the exchange rate by buying and selling the foreign exchange currency.
• So the rates are fixed by the Reserve Bank of India.
• Therefore the correct option for the question asked is C which states Managing floating exchange rate.
• The required sentence after filling the option can be written as "The exchange rate determined by the market forces of demand and supply of foreign exchange is managed floating exchange rate."

PROJECT CODE: #SPJ2