| Assertion [A] Manage floating exchange rate system is a hybrid system of exchange rate used by the most of the countries in recent time. |
| Reason [R] Excessive fluctuation in exchange rate system is checked by the central authority under dirty floating exchange rate. |
A) Assertion [A] is true and Reason [R] is a correct reason of Assertion [A]
B) Assertion [A] is true and Reason [R] is not a correct reason of Assertion [A]
C) Assertion [A] is false, but Reason [R] is true
D) Both are false
Correct Answer: A
Solution :
Under managed floating exchange rate, price is determined by the market forces however, excessive fluctuation is checked by the central bank. Thus, this system has components of both fixed and floating exchange rate system and known as dirty floating exchange rate.
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