Which among the following is NOT true?

Dirty floating rate refers to the system in which the rate of exchange for a currency is fixed by the government.

The correct answer is option 1: Dirty floating rate refers to the system in which the rate of exchange for a currency is fixed by the government.

Option 1: Dirty floating rate refers to the system in which the rate of exchange for a currency is fixed by the government. This is false. Dirty floating rate (also called managed float) is not a fixed rate. It refers to a system where the exchange rate is primarily determined by market forces, but the government or central bank occasionally intervenes to stabilize or direct the currency’s value. So, it is not a fixed exchange rate system.

Option 2: According to Gold standard system, gold was taken as the common unit of parity between currencies of different countries. This is correct. Under the Gold Standard System, currencies were defined in terms of a fixed quantity of gold, which served as the common unit of parity.

Option 3: Flexible exchange rate keeps fluctuating according to demand and supply. This is correct. A flexible exchange rate system allows the currency’s value to fluctuate freely based on demand and supply in the foreign exchange market.

Option 4: Managed floating system is also called as Dirty Floating. This is correct.