Question

Assertion (A): Managed floating exchange rate system is also known as 'hybrid system'.

Reason (R): Managed floating exchange rate system is a combination of a flexible and fixed exchange rate system.

Options

• Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

• Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).

• Assertion (A) is true but Reason (R) is false.

• Assertion (A) is false but Reason (R) is true.

Answer 1

Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

Explanation:

A managed floating system combines a fixed exchange rate system with a flexible exchange rate system. Because it combines fixed and variable exchange rate systems, it is referred to as a hybrid system.