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प्रश्न
Answer the following question.
Explain the distinction between the flexible exchange rate and the managed floating exchange rate.
अंतर स्पष्ट करें
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उत्तर
| Basis of Difference | Flexible Exchange Rate | Managed Floating Exchange Rate |
| Meaning/ Determination | Exchange rate determined by the demand and supply forces only. | Exchange rate determined by forces of demand and supply with occasional government intervention. |
| Name | It is also called free exchange rate system | It is also called dirty floating system. |
| Fluctuations | As it is determined by demand and supply forces, it is prone to more fluctuations. | Comparatively less fluctuations as government intervenes to ensure that the rate does not vary much. |
| Government intervention | No intervention | Government intervenes by selling or purchasing foreign currency in the international market. |
| Predictability of Trade | Unpredictable as the exchange rate is flexible in nature. | Comparatively more predictable as the variations in exchange rates are governed by the monetary authorities. |
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