Download App

Open Economy Macroeconomics — Economics STD 12 Humanities & Commerce — Question

Rajasthan BoardEnglish MediumSTD 12 Humanities & CommerceEconomicsOpen Economy Macroeconomics4 Marks
Question
Would the central bank need to intervene in a managed floating system? Explain why.
✓

Answer

It refers to a system in which foreign exchange rate is determined by market forces and central bank influences the exchange rate through intervention in the foreign market.
  1. It is a hybrid of a fixed exchange rate and a flexible exchange rate system.
  2. In this system, Central bank intervenes in the foreign exchange market to restrict the fluctuations in the exchange rate within certain limits. The aim is to keep exchange rate close to desired target values.
  3. For this, Central bank maintains reserves of foreign exchange to ensure that the exchange rate stays within the targeted value.
  4. It is known as 'Dirty Floating'.

Need a full question paper?

Generate a complete, print-ready paper with questions like this in minutes — across 16+ boards, with answer keys.

Start Generating Free

Explore more

More "4 Marks Question" from Open Economy Macroeconomics→Open Economy Macroeconomics — all question types→Economics STD 12 Humanities & Commerce question papers→Rajasthan Board STD 12 Humanities & Commerce question papers→Rajasthan Board question paper generator→

Similar questions

Calculate 'intermediate consumption from the following data:
S. No.
 
$(₹$ in lakhs$)$
$(i)$
Value of output.
 $200$
$(ii)$
Net value added at factor cost.
 $80$
$(iii)$
Sales tax.
 $15$
$(iv)$
Subsidy.
 $5$
$(v)$
Depreciation.
 $20$
→
Differentiate between Operating Surplus and Compensation of Employees.
→
Differentiate between APC and APS and tell which of them is negative.
→
Explain the role of Cash Reserve Ratio in controlling credit creation
→
Discuss the issue of deficit reduction.
→
What are implications of fiscal deficit?
→
Government incurs expenditure to popularise yoga among the masses. Analyse its impact on gross domestic product and welfare of the people.
→
Calculate Autonomous Consumption Expenditure from the following data about an economy which is in equilibrium:
National income = 500
Marginal propensity to save = 0.30
Investment expenditure = 100
→
The saving curve of an economy makes a negative intercept of ₹ 20 crore and 10% of additional income is saved. Derive the saving and cunsumtions function.
→
Explain the role of reverse repo rate in increasing money supply.
→