The government fixes the exchange rate in case of fixed exchange rate regime ........

Economics (CUET) Balance of Payments

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The government fixes the exchange rate in case of fixed exchange rate regime.

The statement is true.

The statement is false as the government fixes the exchange rate in case of flexible exchange rate regime.

The statement is false as the government fixes the exchange rate in case of managed exchange rate.

None of the above.

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Explanation:

Option (1) is correct.
Explanation: The of exchange rate in which exchange rate is officially declared and fixed by the government is called fixed exchange rate system. Fixed exchange rate is not determined by the forces of demand and supply in the market. Such a rate of exchange has been associated with Gold Standard System during 1880-1914.