Balance of Payments-Exchange Rates [IEcoS (Economic Services) Economics Paper-2]: Questions 1 - 3 of 3

Access detailed explanations (illustrated with images and videos) to 82 questions. Access all new questions we will add tracking exam-pattern and syllabus changes. Unlimited Access for Unlimited Time!

View Sample Explanation or View Features.

Rs. 300.00 or

How to register?

Question number: 1

» Balance of Payments » Exchange Rates

Edit
Essay Question▾

Describe in Detail

Describe the merits of flexible exchange rate system.

Explanation

  • A floating exchange rate (also called a fluctuating or flexible exchange rate) is a type of exchange rate regime in which a currency’s value is allowed to fluctuate in response to foreign exchange market mechanisms.
  • Under a truly flexible exchange rate system, a deficit or surplus in the nation’s balance of payments is automatically corrected by a d

… (1096 more words) …

Question number: 2

» Balance of Payments » Exchange Rates

Edit

Appeared in Year: 2017

Essay Question▾

Describe in Detail

Describe the merits of flexible exchange rate system.

Explanation

The system of flexible exchange rates operates in an easy, quick, and efficient manner in clearing the foreign exchange market.

  • It ensures an automatic adjustment between the forces of demand and supply.

  • There are smooth and continuous adjustments in the foreign exchange market through appropriate changes in the rates of exchange.

  • The automatic exchan

… (186 more words) …

Question number: 3

» Balance of Payments » Exchange Rates

Edit

Appeared in Year: 2010

Essay Question▾

Describe in Detail

Distinguish between Hot money and Capital flight.

Explanation

Capital flight is the uncertain and rapid flowing of large sums of money out of a country.

  • Capital flight may be legal, as in the case of foreign investors who send back their profits to their home country, or it may be illegal as in the case of those economies where the transfer of assets out of a country cannot take place.

  • Capital flight can impose

… (27 more words) …

Developed by: