Question
Floating rate system and Fixed rate system
Answer :
Word Count : 172
| Feature | Floating Rate System | Fixed Rate System |
|---|---|---|
| Definition | A system where the exchange rate is determined by market forces of supply and demand. | A system where the exchange rate is fixed by the government or central bank. |
| Government Intervention | Minimal or no direct intervention; central banks may step in to stabilize volatility. | Government intervenes to maintain the fixed exchange rate by buying/selling currency. |
| Stability | More volatile due to market fluctuations. | More stable as the exchange rate remains constant. |
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