The 'currency board' system is a form of: MCQ with Answer and Explanation

The 'currency board' system is a form of:
A. free float
B. managed float
C. floating exchange rate
D. fixed exchange rate with full backing of domestic currency by foreign reserves
Answer: Option D
Solution (By JKSSB Mock Tests)
A currency board pegs the domestic currency to a foreign currency with full reserve backing.

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Practice More Economy Set 1 Questions

Question #1
Which of the following is a qualitative method of credit control used by RBI?
A. Moral Suasion
B. Cash Reserve Ratio
C. Bank Rate
D. Open Market Operations

Correct Answer: Option A


Explanation:
Moral suasion is a qualitative (selective) method of credit control where RBI persuades banks to follow certain credit policies. Bank Rate, OMO and CRR are quantitative methods.

This question belongs to: Economy GK Economy Set 1
Question #2
Which of the following is a characteristic of the informal sector?
A. High capital intensity and advanced technology
B. Easy entry, small scale and lack of formal regulation
C. Complete absence of employment generation
D. High degree of formal contracts and social security

Correct Answer: Option B


Explanation:
The informal sector is marked by ease of entry, small-scale operations, labour intensity, lack of formal contracts and limited access to social security.

This question belongs to: Economy GK Economy Set 1
Question #3
Which of the following is a feature of the 'Life-Cycle' and 'Permanent-Income' hypotheses taken together?
A. Both emphasise that consumption depends on long-run resource constraints rather than current income alone
B. Both ignore the role of wealth
C. Both assume infinite horizons only
D. Both claim that only current income matters

Correct Answer: Option A


Explanation:
Both the life-cycle hypothesis and the permanent-income hypothesis assert that forward-looking consumers base consumption on expected lifetime or permanent resources rather than on current income alone.

This question belongs to: Economy GK Economy Set 1