Explain the distinction between the flexible exchange rate and the managed floating exchange rate.
CBSE FOREIGN - SET 3 2017
Download our app for free and get started
Flexible exchange rate is the rate which is determined by the supply and demand forces in foreign exchange market. It is free from intervention other than market forces. Whereas, managed floating exchange rate is the market rate which can be influenced by the intervention of the central bank in the foreign exchange market. It is a tool to control unfavourable impacts of flexible exchange rate.
Download our appand get started for free
Experience the future of education. Simply download our apps or reach out to us for more information. Let's shape the future of learning together!No signup needed.*
Similar Questions
- 1View SolutionSuppose C = 100 + 0.75Y D, I = 500, G = 750, taxes are 20 percent of income, X = 150, M = 100 + 0.2Y . Calculate equilibrium income, the budget deficit or surplus and the trade deficit or surplus.
- 2View SolutionDistinguish:
- Between current account and capital account.
- Between autonomous transactions and accommodating transactions of balance of payments account.
- 3View SolutionGive the meaning of 'foreign exchange' and 'foreign exchange rate'. Giving reason, explain the relation between foreign exchange rate and demand for foreign exchange.
- 4View SolutionThe following figures are based on BoP accounts:
Calculate:S.No.(₹ in crores)1.Import of goods.8002.Export of goods.5503.Import of services (Banking, Shipping, Insurance, Tourism, etc.)504.Export of services (Banking, Shipping, Insurance, Tourism, etc.)1505.Unilateral transfers from rest of the world (Gifts, Aids, etc.)1006.Unilateral transfers to rest of the world (Gifts, Aids, etc.)807.Capital receipts (Loan from foreigners, Sale of assets to foreigners, Receipt of capital from foreigners).2008.Capital Payments (Loans to foreigners, Buying of assets from foreigners, Payment of capital to foreigners).70- Balance of Trade.
- Balance of Payments on Current Account.
- Balance Payments on Capital Account.
- Balance of Payments.
- 5View SolutionWhy is the open economy autonomous expenditure multiplier smaller than the closed economy one?
- 6View Solution
- In which sub-account and on which side of balance of payments account will foreign investments in India be recorded? Give reasons.
- What will be the effect of foreign investments in India on exchange rate? Explain.
- 7View SolutionIndian investors borrow from abroad. Answer the following:
- In which sub-account and on which side of the Balance of Payments Account will this borrowing be recorded? Give reason.
- Explain what is the impact of this borrowing on exchange rate.
- 8View SolutionIndian investors lend abroad. Answer the following questions:
- In which sub-account and on which side of Balance of Payments Account such lending is recorded? Give reasons.
- Explain the impact of this lending on market exchange rate.
- 9Calculate:View Solution
- Operating Surplus.
- Domestic Income.
$(₹$ in crores$)$ $(i)$ Compensation of employees $2,000$ $(ii)$ Rent and interest $800$ $(iii)$ Indirect taxes $120$ $(iv)$ Corporation tax $460$ $(v)$ Consumtion of fixed capital $100$ $(vi)$ Subsidies $20$ $(vii)$ Dividend $940$ $(viii)$ Undistributed profits $300$ $(ix)$ Net factor income to abroad $150$ $(x)$ Mixed income $200$ - 10View SolutionSuppose C = 40 + 0.8Y D, T = 50, I = 60, G = 40, X = 90, M = 50 + 0.05Y.
- Find equilibrium income.
- Find the net export balance at equilibrium income.
- What happens to equilibrium income and the net export balance when the government purchases increase from 40 and 50?