A fixed exchange rate is an exchange rate between the currencies of two or more countries that is fixed at some level and is:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → adjusted only infrequently
Under a fixed exchange rate, the government sets the rate at one level. It changes the rate only now and then, by its own action.
A rate that moves freely with demand and supply is a flexible rate. A rate the central bank keeps moderating is managed floating.
NCERT (2026-27): Glossary: “Fixed exchange rate – An exchange rate between the currencies of two or more countries that is fixed at some level and adjusted only infrequently.” “Fixed Exchange Rates In this exchange rate system, the Government fixes the exchange rate at a particular level. …” |