Which of the following is a feature of a flexible exchange rate system?
A. Exchange rate is determined by market forces of demand and supply of foreign exchange
B. No role for speculation
C. Exchange rate is fixed by government decree
D. Complete absence of central bank intervention in all cases
Answer: Option A
Solution (By JKSSB Mock Tests)
Under a pure flexible (floating) exchange rate system, the value of the currency is determined by the interaction of demand and supply in the foreign exchange market.
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