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Question
Under a fixed exchange rate system, Balance of Payments (BoP) adjustment is:
Options
Driven entirely by market forces
Non-existent
Manual / government-managed
Automatic
MCQ
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Solution
In the fixed exchange rate system, BoP adjustment is manual / government-managed, meaning authorities must intervene to correct imbalances. This contrasts with the flexible system, where BoP adjustment is automatic.
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