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Economics · 2024 · 3 marks
CBSE 2024 · Region 1 · Set 2 · Q12
Distinguish between fixed exchange rate system and flexible exchange rate system.
Distinguish between fixed exchange rate system and flexible exchange rate system.
Marking-scheme solution
Under the Fixed Exchange Rate System, the foreign exchange rate is fixed by the government. This exchange rate system helps in maintaining stability in the value of the domestic currency vis-à-vis foreign currencies.Whereas;Under the Flexible Exchange Rate System, the foreign exchange rate is determined by the interaction of market forces of demand and supply. Flexible exchange rate keeps fluctuating according to the demand and supply.
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CBSE Class 12 Economics past-paper question from the 2024 board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.