Question
A system of floating exchange rate fails when governments ignore the verdict of the exchange markets on their policies and resort to direct controls over trade and capital flows."
Answer :
Word Count : 296
_______ __________ _______ _______ ________ ____.
_______ ______ __________ ____ _____ _________ _____ ____ ____.
________ _______ ________ _______ ________ ________.
______ ________ ____ _________ ________ ______ ___.
________ ______ ______ ________ __________ __________ ___ ____ ________ __________ ___.
____ ________ _____ ___ __________ ______ ______ ___ _____ _________ _____.
______ ________ __________ ________ ______ _________ ____ _________ _____.
____ _________ ______ __________ _________ ____ _____ ______ _____.
______ _________ __________ ______ _____ ___ _________ _________ ________ ___ ___ _______.
_____ __________ ____ _____ ____ ______ ________.
______ _____ __________ __________ ___.
_____ ___ _______ ________ ___ __________ _________ _________ ______ _________ ______ ___.
_____ ________ _______ __________ _________ ______ __________ ________ ______ _________ ______.
________ _______ ____ _______ ______ ______ _______ _________.
________ _________ __________ ____ _________ ______ _______ __________ ________ _________.
_____ ________ ________ _________ ______ ____ ____.
________ _________ _______ __________ _____ ______ ______.
_________ _________ _______ _____ _____ ___ _________ _________ ___ _________.
__________ __________ ______ _________ ___ ___ _______ __________.
________ _________ ___ ____ ________ _________.
__________ ______ _____ __________ _________.
________ ____ _________ ______ ___ _________ ______ _____ ________.
______ _____ _____ ___ ________ ___ _____.
________ ______.
Skip in 10
A floating exchange rate system relies on market forces of demand and supply to determine the value of a currency. It allows exchange rates to adjust automatically in response to changes in trade balances, capital flows, and investor sentiment, providing a mechanism for countries to absorb external shocks and maintain economic stability. When governments respect the signals from the foreign exchange market, the system helps in correcting trade imbalances, discouraging speculative attacks, and promoting efficient allocation of resources across borders. However, the system fails when governments intervene excessively, ignoring market signals. Direct
__________ ______ ______ _____ _________ ________ _________ ____ ________ __________._______ __________ _______ _______ ________ ____.
_______ ______ __________ ____ _____ _________ _____ ____ ____.
________ _______ ________ _______ ________ ________.
______ ________ ____ _________ ________ ______ ___.
________ ______ ______ ________ __________ __________ ___ ____ ________ __________ ___.
____ ________ _____ ___ __________ ______ ______ ___ _____ _________ _____.
______ ________ __________ ________ ______ _________ ____ _________ _____.
____ _________ ______ __________ _________ ____ _____ ______ _____.
______ _________ __________ ______ _____ ___ _________ _________ ________ ___ ___ _______.
_____ __________ ____ _____ ____ ______ ________.
______ _____ __________ __________ ___.
_____ ___ _______ ________ ___ __________ _________ _________ ______ _________ ______ ___.
_____ ________ _______ __________ _________ ______ __________ ________ ______ _________ ______.
________ _______ ____ _______ ______ ______ _______ _________.
________ _________ __________ ____ _________ ______ _______ __________ ________ _________.
_____ ________ ________ _________ ______ ____ ____.
________ _________ _______ __________ _____ ______ ______.
_________ _________ _______ _____ _____ ___ _________ _________ ___ _________.
__________ __________ ______ _________ ___ ___ _______ __________.
________ _________ ___ ____ ________ _________.
__________ ______ _____ __________ _________.
________ ____ _________ ______ ___ _________ ______ _____ ________.
______ _____ _____ ___ ________ ___ _____.
________ ______.
IGNOU ACADEMY
Your IGNOU journey, made easier.
- Solved Assignments
- Study Notes
- Guess Papers
- Question Papers
Continue Reading — It's Free
Sign in with Google to unlock more of this answer.
✓ Free access
✓ Unlock up to 60% of the answer
✓ No payment required
✓ Unlock up to 60% of the answer
✓ No payment required
Quick Google sign-in. No separate registration form.