Question:medium
Distinguish between fixed exchange rate system and flexible exchange rate system.
Distinguish between fixed exchange rate system and flexible exchange rate system.
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In fixed systems, stability is prioritized; in flexible systems, economic adjustments are key.
Updated On: Jan 13, 2026
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Solution and Explanation
\[
\begin{array}{|l|l|}
\hline
\textbf{Fixed Exchange Rate System} & \textbf{Flexible Exchange Rate System} \\
\hline
\text{The government sets the currency's value.} & \text{The currency's value is determined by market supply and demand.} \\
\text{Provides stability for international trade.} & \text{Enables automatic currency adjustment to economic shifts.} \\
\text{Requires continuous central bank involvement.} & \text{Central bank intervention is minimal.} \\
\hline
\end{array}
\]
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