ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Under flexible exchange rate regime, the rate of exchange is determined by the forces of demand and supply. In other words, the equilibrium rate of exchange occurs where demand and supply are equal to each other.

Detailed explanation-2: -Detailed Solution. The correct answer is option 3, i.e. Managed floating exchange rate system. In the Managed floating exchange rate system, the foreign exchange rate is determined by the market forces and the central bank influences the exchange rate through involvement in the foreign exchange market.

Detailed explanation-3: -In macroeconomics, a flexible exchange-rate system is a monetary system that allows the exchange rate to be determined by supply and demand. Every currency area must decide what type of exchange rate arrangement to maintain.

Detailed explanation-4: -question. Managed floating exchange rate refers to the rate which changes from day to day in the current international financial environment. In order to manage the exchange rates, central banks buy and sell the currencies. Option (c) is correct.