FOREIGN EXCHANGE

Fill in the blanks. Fixed exchange rate is the rate which is officially fixed by the government, monetary authority and not determined by market forces.Flexible exchange rate is the rate which is determined by forces of supply and demand in the foreign exchange market.The equilibrium exchange rate is determined at a point where demand for and supply of foreign exchange are equal. Graphically interaction of demand and supply curve determines the equilibrium exchange rate of foreign currency. Managed floating is the combination of fixed and flexible exchange rate. Under this, country manipulates the exchange rate to adjust the deficit in the B.O.P by following certain guidelines issued by I.M.F. Match the correct gold standard system fixed exchange rate system visible items balance balance of trade current & capital account balance of payment value of domestic currency increases appreciation value of domestic currency decreases depreciation