Question : Which of the following is not a type of exchange rate regime?
Option 1: Fixed exchange rate
Option 2: Floating exchange rate
Option 3: Managed float exchange rate
Option 4: Hybrid exchange rate
Correct Answer: Hybrid exchange rate
Solution : The correct answer is (d) Hybrid exchange rate.
Fixed exchange rate, floating exchange rate, and managed float exchange rate are all recognized types of exchange rate regimes.
Fixed exchange rate: Under a fixed exchange rate regime, the value of a country's currency is pegged to a specific value or a basket of currencies. The exchange rate is kept relatively stable through intervention by the central bank or government.
Floating exchange rate: In a floating exchange rate regime, the value of a country's currency is determined by market forces of supply and demand. The exchange rate fluctuates freely based on factors such as interest rates, inflation, and capital flows.
Managed float exchange rate: A managed float exchange rate regime is a combination of fixed and floating exchange rates. The exchange rate is allowed to fluctuate within a certain range determined by the central bank, with occasional intervention to stabilize the currency.
Hybrid exchange rate is not a recognized term for an exchange rate regime and is not commonly used in economic literature.
