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प्रश्न
"Under the flexible exchange rate system, the Central Bank does not intervene in the foreign exchange market."
Justify the statement, giving valid arguments.
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उत्तर
Yes, the Central Bank does not intervene in the currency market under the flexible exchange rate regime.
- The exchange rate is determined by market forces, such as demand and supply of foreign money, in a flexible exchange rate system.
- The rise in the foreign exchange rate is caused by an increase in demand and a decrease in supply of foreign currency.
- The reduction in the foreign exchange rate is caused by a decrease in demand and an increase in supply of foreign exchange.
- Imports, direct purchases overseas, investment in the rest of the globe, repayment of international debts, and other factors influence forex demand.
- The supply of currency is determined by factors such as exports, direct purchases by the rest of the world, loans from the rest of the world, and so on.
संबंधित प्रश्न
What is the marginal propensity to import when M = 60 + 0.06Y? What is the relationship between the marginal propensity to import and the aggregate demand function?
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If inflation is higher in country A than in Country B, and the exchange rate between the two countries is fixed, what is likely to happen to the trade balance between the two countries?
______ system allows continuous and regular adjustments in the exchange rate.
Point out a demerit of the fixed exchange rate.
Exchange rate is the price of a currency expressed in terms of:
What is the rate at which one currency is exchanged for another in the foreign exchange market?
Under the Fixed Exchange Rate System, the exchange rate is determined by whom?
Which statement describes Government Intervention under a Flexible Exchange Rate System?
A rise in domestic currency value under a Flexible Exchange Rate System is called what?
A rise in domestic currency value under a Fixed Exchange Rate System is called what?
Under Flexible Exchange Rates, equilibrium is reached at which condition?
Which factor states that expectation of appreciation of a foreign currency increases its demand?
Higher domestic interest rates attract foreign investment and increase demand for which currency?
Higher national income increases imports and produces which result?
