Arrange the following statements in correct sequence relating to change in exchange.

(A) The Central Bank intervenes to purchase dollars rate between Dollars and Rupee in the foreign exchange market.
(B) The government sets the exchange rate above the equilibrium exchange rate.
(C) This will absorb the excess supply of dollars in the foreign exchange market.
(D) It will result in excess supply of dollars in the foreign exchange market.

Choose the correct answer from the options given below :

(B), (D), (A), (C)

When the government sets the exchange rate above the equilibrium exchange rate, it means that the government is pegging the exchange rate at a higher level than the market would naturally determine. This will create an excess supply of dollars in the foreign exchange market, as people will be willing to sell dollars for rupees at the higher exchange rate.

To absorb this excess supply of dollars, the Central Bank will intervene in the foreign exchange market and purchase dollars with rupees. This will reduce the supply of dollars in the market and help to bring the exchange rate back down to the equilibrium level.

Therefore, the correct sequence of events is B, D, A,C:

(B) The government sets the exchange rate above the equilibrium exchange rate.

(D) It will result in excess supply of dollars in the foreign exchange market.

(A) The Central Bank intervenes to purchase dollars rate between Dollars and Rupee in the foreign exchange market.

(C) This will absorb the excess supply of dollars in the foreign exchange market.