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Open Economy Macroeconomics — Economics STD 12 Commerce — Question

CBSE BoardEnglish MediumSTD 12 CommerceEconomicsOpen Economy Macroeconomics3 Marks
Question
What are fixed and flexible exchange rates?
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Answer

Fixed Exchange Rate is the exchange rate fixed by the government/central bank and is not influenced by the demand and supply of foreign exchange. Flexible exchange rate is the exchange rate determined by the forces of demand and supply of foreign exchange in the market and is influenced by the market forces.

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