Match List I with List II

Choose the correct answer from the options given below:

A-II, B-IV, C-I, D-III

Fixed exchange rate system refers to the system in which the rate of exchange for the currency is fixed by the government itself. 

Flexible exchange rate is determined by the market forces of demand and supply. It is also known as Floating Exchange Rate. There is no contribution by the government in influencing the exchange rate.

Managed floating rate system, which is also called as "Hybrid system" of exchange rate is a system in which foreign exchange rate is determined by the market forces and central bank stabilizes the exchange rate in case of appreciation or depreciation of domestic currency. Thus we can say it is a mixture of fixed and flexible exchange rate system.

Speculation basically means expectation of gain from appreciation of the currency. For example: If Indians believe that British pound is going to increase in value relative to the rupee, they will want to hold pounds. Thus exchange rates also get affected when people hold foreign exchange on the expectation that they can make gains from the appreciation of the currency. This is often termed as speculation.