Examveda
Examveda

Which among the following statement is INCORRECT?

A. Floating exchange rate system works on the market mechanism

B. Floating exchange rate breeds uncertainties and speculation

C. Economic and political factors and value judgement influence the choice of the exchange rate system

D. The system of floating exchange rate requires comprehensive government intervention

Answer: Option D

Solution(By Examveda Team)

A floating exchange rate is one that is determined by supply and demand on the open market. A floating exchange rate doesn't mean countries don't try to intervene and manipulate their currency's price, since governments and central banks regularly attempt to keep their currency price favorable for international trade.

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Related Questions on Economics

Which among the following statement is INCORRECT?

A. On a linear demand curve, all the five forms of elasticity can be depicted

B. If two demand curves are linear and intersecting each other, then, coefficient of elasticity would be same on different demand curves at the point of intersection.

C. If two demand curves are linear and parallel to each other, then, at a particular price, the coefficient of elasticity would be different on different demand curves.

D. The price elasticity of demand is expressed in terms of relaive not absolute changes in Price and Quantity demanded.