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Question
Which are the two main systems of exchange rate determination?
Options
Demand and supply and Interest Rate Differential
Gold Standard System and Purchasing Power Parity (PPP)
Flexible (Floating) Exchange Rate System and Fixed Exchange Rate System
Depreciation and Devaluation
MCQ
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Solution
The two main systems are the Flexible (Floating) Exchange Rate System and the Fixed Exchange Rate System. They differ in how the exchange rate is determined and in the role of Government or RBI.
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