Identify the set of correct Statements :

(A) Fixed Exchange rate is regulated by the Government

(B) Flexible Exchange rate is regulated by the market forces

(C) Dirty Floating is a hybrid of Fixed and Flexible Exchange rate system

(D) Flexible exchange rate system is also known as dirty floating

(E) Fixed exchange rate keeps on changing with the change with the change in demand and supply of Foreign Exchange

Choose the correct answer from the options given below :

(A), (B) and (C) only

The correct answer is option (3) : (A), (B) and (C) only

(A) Fixed Exchange rate is regulated by the Government : Correct. In a fixed exchange rate system, the government or central bank intervenes to maintain a specific value for its currency.

(B) Flexible Exchange rate is regulated by the market forces : Correct. In a flexible exchange rate system, the value of the currency is determined by market forces of supply and demand.

(C) Dirty Floating is a hybrid of Fixed and Flexible Exchange rate system : Correct. Dirty floating involves a mix of both fixed and flexible exchange rate elements. While the currency generally floats, the government may intervene occasionally to influence its value.

The other statement are incorrect :

(D) Flexible exchange rate system is also known as dirty floating : This is incorrect. Flexible exchange rate and dirty floating are distinct concepts. In a flexible exchange rate, the currency value if determined entirely by market forces, while dirty floating involves occasional government intervention.

(E) Fixed exchange rate keeps on changing with the change in demand and supply of Foreign Exchange : This is incorrect. In a fixed exchange rate system, the rate is fixed by the government and does not change with daily fluctuations in demand and supply.