courses.ea.asu.edu Session with Bart Hobin A spectrum of exchange rate policies

Question

courses.ea.asu.edu Session with Bart Hobin A spectrum of exchange rate policies Exchange rate is usualy determined by market but Central bank ntervenes in market to keep currency fxed at a certain leve The cumency by market to cumency of anoper county In Part 7-1 we looked at tour difterent exchange rate policies. The exhibilt above describes each of these policies Which exchange rate policy is represented by lemer A? A loating exchange rate policy None of these A soh exchange tate peg policy A hard exchange rate peg poicy MacBook Air

Explanation / Answer

Such Exchange rate policy is called managed floating exchange rate. In case of excessive volatility in exchange rate, central bank intervenes in market either by buying or selling foreign exchange to keep exchange floating rate within in comfort level.

Right answer is : Managed floating exchange rate Policy.

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