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Economics · 2023 · 3 marks
CBSE 2023 · Region 4 · Set 1 · Q12
(a) "The central bank needs to intervene under the managed floating system." Do you agree with the given statement? Support your answer with valid…
(a)
"The central bank needs to intervene under the managed floating system."
Do you agree with the given statement ? Support your answer with valid reasons.
OR
(b)
Differentiate between Surplus in Balance of Trade and Current Account Surplus.
Marking-scheme solution
Yes. Under the managed floating system, the central bank allows the exchange rate to be determined by market forces of demand and supply. It may buy and sell foreign exchange to moderate exchange rate fluctuations. This intervention is undertaken to keep the exchange rate within the desired range.
Surplus in the Balance of trade arises when the value of exports of visibles is more than the value of imports of visibles.
Whereas,
The current account surplus arises when receipts from exports of visibles, invisibles and unilateral transfers are more than payments for imports of visible, invisibles and unilateral transfers.
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CBSE Class 12 Economics past-paper question from the 2023 board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.